Paytm denies rumors of Adani stake acquisition; stock increases

Despite the company’s denials, on May 29, Paytm’s shares hit a 5 per cent high in early trading.

The news agency reported that Adani Group chairman Gautam Adani was interested in acquiring a stake in One97 Communications, which operates the Paytm mobile wallet. The report also mentioned a meeting between Paytm founder and CEO Vijay Shekhar Sharma and Gautam Adani on May 28 at the Adani Group headquarters in Ahmedabad to “finalize the outline of the deal”.

If the deal goes through, it would put the Adani Group in direct competition with major fintech players including Google Pay, Walmart-owned PhonePe and Mukesh Ambani-owned Jio Financial. This acquisition would also mark another significant investment for Adani after notable purchases such as Ambuja Cements and NDTV.

Vijay Shekhar Sharma holds nearly 19 per cent stake in One97 Communications worth Rs 4,218 crore at its closing price of Rs 342 per share on May 28. It owns 9 percent directly and an additional 10 percent through an overseas company, Resilient Asset Management. One97’s stock filings indicate that both Sharma and Resilient Asset Management are public shareholders.

Paytm has faced several challenges recently. On January 31, the Reserve Bank of India (RBI) imposed business restrictions on Paytm Payments Bank (PPBL) over repeated violations of norms and non-compliance with multiple rules. The RBI has barred PPBL from accepting fresh deposits and conducting credit transactions after February 29.

Additionally, in March 2024, PPBL was banned from onboarding new clients following an audit report that highlighted persistent non-compliance and significant supervisory concerns. These actions have significantly impacted Paytm’s stock, which has lost over 50 percent of its value since the RBI’s move.

Moreover, key lending partners such as Aditya Birla Finance, Piramal Finance and Clix Capital have severed ties with Paytm following the RBI restrictions imposed on PPBL. Reports suggest that on May 8, Aditya Birla Finance invoked loan guarantees due to delays in repayments by customers.

Rumors of a partnership with Adani Group, while speculative, seemed like a potential turning point for the struggling fintech company. Meanwhile, Adani Group shares, including Adani Enterprises, Adani Green Energy and Adani Ports & SEZ, recently recovered from the losses caused by the critical Hindenburg report and are now trading above January 2023 levels.

The continued development highlights the dynamic nature of the fintech industry and business in India, where regulatory compliance and strategic partnerships play a key role in shaping the future of the industry.