Alibaba Group has sold a 3.1% stake in Indian digital payments company, Paytm, for $125 million through a block deal.The shares of Paytm fell as much as 8.8% to 528 rupees in afternoon trading.
Alibaba, which held a 6.26% stake in Paytm as of the end of September, sold the stake at 536.95 rupees each. This move is the latest in a string of divestments that Alibaba has made in the past few months, as the company shifts its focus to other markets.
The shares were bought mainly by hedge funds, including Millennium Capital, Segantii Capital Management, Ghisallo Capital Management, and Norges Bank, Norway’s central bank. The transaction was led by Bank of America.
It is worth noting that this is not the first time that Alibaba has reduced its stake in Paytm. In November of last year, Softbank Group sold a 4.5% stake in the e-payments firm worth $200 million. SoftBank had a 17.5% stake in Paytm as of Sept. 30. This move follows a trend of divestments that Softbank has made in the past few months after its flagship Vision Fund unit booked nearly $50 billion in losses in just six months.
Paytm’s stock has risen about 9% this year up to the last close, after reporting strong preliminary figures for the third quarter. However, it closed 2022 with a 60% loss, despite the company announcing a share buyback in December.
What is Paytm?
The company is formally known as One97 Communications and was listed in 2021 after a mega $2.5 billion initial public offer (IPO). Since then, the stock has dropped around 75% from its IPO offer price as investors started questioning the company’s monetization plans amid worries about sky-high valuations of tech companies and fears of a global economic recession.
It is also worth mentioning that the $125 million figure represents a small portion of Alibaba’s overall investment in Paytm, which is estimated to be around $680 million. Paytm’s valuation is reportedly around $16 billion.
The sale of the stake is not yet known, but it could be due to the ongoing trade tensions between India and China. India has been tightening regulations on Chinese investments, and this may have played a role in Alibaba’s decision to sell its stake.
Alibaba has sold a 3.1% stake in Indian digital payments firm Paytm for a total of $125 million through a block deal on Thursday. This move is the latest in a string of divestment’s that Alibaba has made in the past few months, as the company shifts its focus to other markets.
The reason behind the sale is not yet known, but it could be due to the ongoing trade tensions between India and China. This move could mean that Alibaba is shifting its focus from India’s digital payment market to other markets.
