Paytm stock price plunged by nearly 9% on Thursday to drop to ₹528 in afternoon trading, before rallying a bit. The reason? Chinese behemoth Alibaba Group further distanced itself from Indian startups by selling part of its stake in the digital payments and financial services company. Alibaba’s Paytm investment has been among the most storied and documented relationship in the Indian startup ecosystem.
The Chinese titan sold around 19.20 million shares – or 3.1% of its stake – of One97 Communications Ltd through a block deal on Thursday. One97 Communications is the parent company of Paytm, and with the latest block deal, Hangzhou-headquartered Alibaba further reduced its prior stake of 6.26% in the firm.
Alibaba sold the Paytm share at ₹536.95 apiece, a drop from the current price of Paytm shares – ₹543.50. The drop ensured that Paytm suffered its steepest fall since November 22. Overall, the decision to sell a stake through a block deal cost the Chinese behemoth a total of $125 million, according to a report by Reuters.
However, a report by The Hindu informs that even though Alibaba offloaded almost half of its direct shareholding in the Indian firm, Alibaba group firm Ant Financial showed no indication of following in its footsteps and continues to maintain its stake in the company.
This development does, however, indicate Alibaba’s willingness to bid a steady retreat from the Indian market. Over the past few months, the Chinese multinational tech behemoth had been offloading part of its shares in online grocery delivery service BigBasket and food delivery aggregator Zomato. Sources close to the development said that this could come as a piece of good news for investors – as Chinese shareholders bid an exit from the Indian market by reducing their stakes it will benefit the company in their FDI aspect. In fact, immediately after the block deal (where the share price fell to ₹534), it soon recovered to ₹548.”
For its part, Paytm had a decent outing last year, despite fears of an economic recession and coming after a steep plunge in its stocks in its post-IPO period. During the October-December quarter, it added one million payment devices and clocked a rise of 357% in its total disbursements – it jumped to reach ₹9,958 crores. Pay’m’s monthly transacting users rose by 32% YoY to reach 85 million in December, while the number of merchants paying subscriptions for payment devices touched 5.8 million as of December 2022.
