Paytm’s Singapore Arm Offloads Stake In PayPay, Worth $279 Mn

One97 Communications Singapore, a subsidiary of fintech giant Paytm, has sold its stock acquisition rights (SARs) in Japanese digital payments startup PayPay Corporation to SoftBank’s Vision Fund 2 for INR 2,364 crore ($279.19 million).

SARs are options/warrants that grant the holder the right to sell stocks in the issuing business. These are typically awarded as part of a company’s equity-based compensation program.

PayPay was launched in 2018 as a collaboration between Softbank, Yahoo Japan, and Paytm. It provides smartphone payment services through barcodes (QR Codes), similar to Paytm. The Tokyo-based corporation boasts a user base of 65 million.

The corporation stated that its subsidiary’s board approved the selling of the SARs because it added significant value to the company. Paytm’s financial reserves would be boosted by INR 2,364 crore, which it plans to use to fuel future business efforts.

“We are completely committed and will continue to support PayPay’s product and technology improvements in the future. “We are developing new AI-powered features to accelerate PayPay’s vision in Japan,” a Paytm spokeswoman stated.

Related: Fintech Giant Paytm Registers INR 930 Cr Profit in Q2 FY24 On the Back of Ticketing Business Sale

PayPay will be valued at $7.06 billion after the acquisition, which is anticipated to finalize this month, according to an exchange filing by Paytm.

It’s worth noting that the share sale is around 12% larger than the $250 million earlier indicated by reports yesterday. Paytm informed the bourses that its Singapore subsidiary’s board has approved the sale of SARs in PayPay Corporation, hours after the stake sale was initially disclosed.

Paytm held SARs in the Japanese company because it was a key figure in its inception.

As of March 31, 2021, Paytm had SARs worth 7.2% of PayPay’s equity.

This will be Paytm’s second cash reserve rise this fiscal year. In August, it sold Paytm Insider, its events and ticketing arm, to Zomato for $241.8 million (INR 2,048 crore).

The company’s cash balance at the end of the second quarter of FY25 was INR 9,999 crore, up more than 23% from INR 8,108 crore at the end of the previous June quarter.

Paytm’s founder and CEO, Vijay Shekhar Sharma, has recently expressed optimism about expanding the company’s primary consumer payments business. In October, Sharma stated that the company intends to reinvest in the consumer payments industry.

However, it is unclear what types of investments Paytm will make. Paytm introduced additional services last month, including UPI Lite Auto Top-Ups, UPI International in select outside markets, and the option to download UPI statements.

Paytm shares closed yesterday’s trading session at INR 975.80, 2.02% higher than the previous closing.