Paytm's Singapore unit to sell stake in Japan's PayPay for Rs 2,364 crore

Indian fintech major Paytm’s wholly-owned Singapore entity is set to sell its stake in Japanese fintech corporation PayPay to Softbank Vision Fund 2 for Rs 2,364 crore.

 

One97 Communications Singapore approved the sale of Stock Acquisition Rights (SARs) held in PayPay Corporation on Friday. The transaction is expected to close this month subject to approvals. The sale is expected to strengthen the parent company’s cash reserves. 

 

At present, PayPay is valued at about Rs 60,000 crore (around USD 7 billion). Paytm’s Singapore unit had acquired these SARs in September 2020. 

 

The firm currently has a cash balance of over Rs 10,000 crore. The Rs 2,364 crore sale would expand it by over 20 per cent. 

 

“The SARs sale net proceeds would fortify the consolidated cash reserves of OCL and help drive future business initiatives, focused on maximising value creation for shareholders,” the company said in a release.

 

The firm said it will ‘continue to support’ PayPay with technology and product innovation. 

 

"We are grateful to Masayoshi-san and the PayPay team for giving us the opportunity to together create a mobile payment revolution in Japan. We are working on introducing new AI-powered features to accelerate PayPay’s vision in Japan,” a Paytm spokesperson said. 

 

PayPay is a payments services company based in Japan. It is a joint venture between SoftBank and Yahoo Japan, with Paytm as a technology partner. It was founded in June 2018.

 

At an event in Mumbai last week, Paytm founder and Chief Executive Officer (CEO) Vijay Shekhar Sharma said that the Japanese company had a 65 per cent market share on the customer side and a 75 per cent share on the merchant side. 

 

The announcement of the approval of the stake sale comes months after the company sold its entertainment ticketing business to food aggregator Zomato for Rs 2,048 crore.

 

The sale of non-core businesses comes as the company looks to divest these assets and focus on its business of payments and distribution of financial services.

 

The focus on core businesses comes as the firm navigates around regulatory challenges; the latest one being the Reserve Bank of India’s (RBI) action on its associate entity Paytm Payments Bank.

 

In October, it received a nod from the National Payments Corporation of India (NPCI) to start onboarding new users after a nearly 10-month embargo that restricted the firm to sign new users on the platform. 

 

In the Unified Payments Interface (UPI) space, the company operates as the third largest third party application provider (TPAP) with a market share of around 7 per cent.