The founder and CEO of Paytm stated at Davos on January 17 that Alibaba was never a vital shareholder of the fintech company. This occurred just days after the Chinese internet giant sold shares in the Indian fintech business for $125 million. Speaking to CNBC TV18 on the sidelines of the World Economic Forum, Sharma claimed that the deal might have been better organised and that the company needed to be aware of it in advance
“Alibaba was never a strategic shareholder for us. Alibaba and Paytm were never together in the business… The exit could have been planned better, but it is what it is,” he said. A financial investor makes a wager only looking for returns, unlike a strategic shareholder who has business ties to the investee company.
Alibaba and Ant Financial, a subsidiary of Alibaba, increased their stock investment in Paytm by over 44% in 2015 by investing $680 million, making them the company’s top shareholders. The pair still owns about 28 per cent of Paytm even after selling shares in the Noida-based fintech at its IPO and the most recent transaction.
Alibaba increased their stock investments in Paytm
Since the unicorn fintech company went public in November 2021, analysts and investors have questioned its business strategy, the road to profitability, and the threat from regulatory changes, causing its shares to lose 75% of their value.
Paytm’s share price began on the BSE considerably lower by 6.4% at 563.25 due to the development, and the benchmark Sensex on the BSE fell 26 points to 61,954 levels. The large-cap stock, which had already lost some ground, dropped as much as 10% to reach a low of 541.3 thanks to heavy trading volume. Compared to the two-week average volume of 1.24 lakh stocks, there was a sharp increase in selling activity as 28 lakh shares were traded over the counter on the BSE.
As investors were uneasy following the expiration of the pre-IPO shareholders’ one-year required lock-in period on November 16, the stock remained under pressure. The pre-IPO investors, including Warren Buffet’s Berkshire Hathaway, billionaire Jack Ma’s Alibaba Group, SoftBank, and Elevation Capital, are free to sell their shares in the company after the lock-in period has expired.
Since its listing on November 18, 2021, Paytm, one of the worst-performing initial public offerings (IPOs), has destroyed 72% of investors’ capital. The company had raised 18,300 crores through publicly listing shares at an issue price of 2,150, making it the second-largest IPO in the nation’s history.
According to information on the BSE, Paytm shares reached an all-time high of 1,961.05 on November 18, 2021, the day they were listed, and a record low of 511 on April 5, 2022. The stock’s current trading price is more than 72% below the 2,150 it cost to issue it in the IPO.