Confirming earlier reports, that Paytm is looking at a share buy back program, to bring back at least some of the lost share value, the company has confirmed the same today. In a press release issued late Tuesday, Paytm said that it is initiating a ₹850 crore share buy back program, which was “unanimously approved” by all its board members, including independent directors.
Paytm stock closed 1.83% higher at ₹538.40 in anticipation of the buy back announcement. Further surge in share price could be seen in coming days, though it is still trading well, well below the iPO opening price of ₹2,150.
According to the announcement, the company has put a cap on the maximum buy back share price, at ₹810. And while it is a 50% premium to the price that it opened up on morning of 13th December (date of announcement), it is still a far cry from the opening price of its IPO. In case the buy back happens at a share price less than ₹810, then the quantum of shares to be bought back, shall be increased, with total value not exceeding ₹850 crore.
The Company shall utilise at least 50% of the amount earmarked as the Maximum Buyback Size i.e. ₹425 crores (Rupees Four Hundred and Twenty-Five crores only), for the Buyback (“Minimum Buyback Size”). Based on the Minimum Buyback Size and Maximum Buyback Price, the Company would purchase a minimum of 5,246,913 Equity Shares.
Founder and CEO Vijay Shekhar Sharma said, “Over the last year, there is clear business momentum, and we are ahead of our plans. Looking at the monetisation opportunities in our core payment and credit business, we feel confident to generate healthy revenues and cash flows to invest in sales, marketing and technology. We value our shareholders and their journey with us in the public markets. I believe that a buyback at this stage will be immensely beneficial for our stakeholders and will drive long-term shareholder value.”
The public announcement setting out the process, timelines and other requisite details of the Buyback will be released in accordance with the Buyback Regulations. The dates of the Buyback offer shall be mentioned in the public announcement.
As on December 9, Indian public held a 25.33% stake in Paytm. The company had undergone India’s largest public listing at the time, raising nearly $2Billion in its IPO. And while it did see a full subscription of its IPO, the stock hasn’t gone over the ₹2,150 IPO price, even once. Paytm has since seen nearly 75% of its market cap being eroded and continues to be under intense public scrutiny.