Indian fintech leader Paytm's wholly-owned Singapore entity is set to sell its stake in Japanese fintech corporation PayPay to SoftBank Vision Fund 2 for Rs 2,364 crore.
One97 Communications Singapore on Friday approved the sale of stock acquisition rights (SARs) held in PayPay Corporation. The transaction is expected to close this month, subject to approval. The sale is expected to strengthen the parent company's cash reserves.
PayPay is currently valued at around Rs 60,000 crore (about USD 7 billion). Paytm's Singapore unit acquired these SARs in September 2020.
The company currently has cash of over Rs 10,000 crore. The sale of Rs 2,364 crore will expand it by over 20 per cent.
“The net proceeds from the SARs sale will strengthen OCL’s consolidated cash reserves and help drive future business initiatives with a focus on maximizing shareholder value creation,” the company said in a release.
The firm said it will “continue to support” Pepe with technology and product innovation.`
“We are grateful to Masayoshi-san and the PayPay team for giving us the opportunity to create a mobile payments revolution in Japan together. We are working on introducing new AI-powered features to accelerate PayPay’s vision in Japan,” a Paytm spokesperson said.
PayPay is a Japan-based payments services company. It is a joint venture between SoftBank and Yahoo Japan, with Paytm as a technology partner. It was founded in June 2018.
At an event in Mumbai last week, Paytm founder and chief executive officer (CEO) Vijay Shekhar Sharma said that the Japanese company has a 65 percent market share on the consumer side and 75 percent on the merchant side.
The announcement of the approval of the stake sale comes months after the company sold its entertainment ticketing business to food aggregator Zomato for Rs. 2,048 crore.
The sale of non-core businesses comes as the company looks to divest these assets and focus on its payments and financial services distribution business.
The focus on core businesses comes as the firm navigates regulatory challenges; the latest being the Reserve Bank of India (RBI) taking action on its affiliate Paytm Payments Bank.
In October, it received permission from the National Payments Corporation of India (NPCI) to start onboarding new users after a nearly 10-month ban that had barred the firm from signing up new users on the platform.
In the Unified Payments Interface (UPI) space, the company operates as the third-largest third-party application provider (TPAP) with a market share of nearly 7 percent.
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The firm said it will “continue to support” Pepe with technology and product innovation.`
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