Adani’s acquisition of Paytm will redefine the equations in the Indian Fintech sector

Adani is in talks to acquire Paytm!

Adani Group is reportedly considering a stake in Paytm’s parent company, One97 Communications Limited (OCL). Sources familiar with the matter revealed that Paytm CEO Vijay Shekhar Sharma recently visited Adani’s Ahmedabad office to discuss the potential deal.

However, Paytm has just released an official statement refuting all claims related to Paytm’s acquisition by the Adani Group.

“We hereby clarify that the above information is speculative and the company is not conducting any discussions on this subject. We have always and will continue to disclose information in accordance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.” Paytm said in an official statement.

Some media outlets also report that Sharma has no plans to sell his personal stake in One97 Communications.

Vijay Shekhar Sharma owns about 19% of One97 Communications, which amounts to Rs 4,218 crore based on Tuesday’s share price of Rs 342 per share. This suggests a potential strategic partnership rather than a complete takeover.

Paytm’s other major shareholders include Saif Partners, which holds 15% stake; Antfin Netherlands (founded by Jack Ma), which holds 10%; and the company’s directors, who collectively own 9%.

Interestingly, the news of Paytm’s potential acquisition has triggered a positive market reaction. Paytm shares jumped 5% at opening on BSE to settle at Rs 359.55 at 9:21 am on May 29, 2024.

Adani Paytm Acquisition: Gaining a Competitive Advantage

One97 Communications has been facing challenges ever since the RBI banned its Paytm Payments Bank Limited (PPBL). Industry analysts speculate that the acquisition could be the only saving grace for Paytm, with Reliance emerging as a likely suitor given its efforts to strengthen Jio Financial, a newcomer to the Indian fintech sector.

However, as the Adani Group prepares to enter the e-commerce and digital payments arena, the news has electrified the speculation mill around a potential acquisition of Paytm.

If Adani Group successfully acquires stake in One97 Communications, it will undoubtedly gain a competitive advantage over Reliance Jio Financial, Google Pay and PhonePe. As of March 2024, Paytm boasts of 9.6 crore Paytm Monthly Transaction Users (MTUs). Adani already has data on millions of customers, with a diverse portfolio spanning maritime, airports, electricity, mining, food, weapons and infrastructure.

Reports indicate that Adani and Sharma were in discussions for a significant period of time. Their last meeting focused on finalizing the complicated details of the deal. In addition to the talks, Adani is actively reaching out to West Asian funds to attract investors to One97 Communications, acknowledging its current financial challenges.

Due to regulatory setbacks, Paytm’s revenue declined by 3% to ₹2,267 crore while net loss increased 228% year-on-year to ₹550 crore in Q4FY24. In a strategic response, the fintech withdrew its general insurance license application and switched solely to providing insurance distribution services.

The Indian fintech sector is estimated to be a $2.1 trillion opportunity 2030. As the sector continues to grow, a potential acquisition of Paytm by the Adani Group could give competitors a run for their money. With Paytm’s wide user base and Adani’s massive reach, they are not just players; they change the rules of the game. Together, Adani and Paytm have the potential to completely transform financial services, offering Indian consumers a completely new way to manage their money and revolutionizing the way business is done in India.