When it comes to digital payments in India, Paytm is the first name that springs to mind, much like ATM for cash. However, the company’s journey from a celebrated household name to its recent struggles on the stock market tells a tale of challenges and setbacks.
Chinese Investors Pull Back
In the aftermath of demonetization in 2016, Paytm became ubiquitous in Indian households, riding the wave of digital payments. The company even marked November 8, the demonetization anniversary, with the launch of its IPO in 2021. However, as Chinese investors, notably Alibaba, started divesting their significant stakes in Paytm, the company’s shares began a downward spiral.
IPO Fallout
Paytm’s IPO, valued at ₹180 billion, was a significant event, benefiting major stakeholders like Alibaba and SoftBank. While Paytm’s founder, Vijay Shekhar Sharma, gained substantially, Chinese conglomerate Alibaba pocketed a significant sum, along with SoftBank. Ant Group, an affiliate of Alibaba, also had a sizable shareholding in Paytm, further complicating the situation.
Stock Market Turmoil
Despite the hype surrounding its IPO, Paytm faced a tumultuous time on the stock market. Its share price plummeted by 27% from its IPO price within a day of listing. Since then, the stock has struggled to regain its footing, experiencing continuous declines, especially after RBI’s regulatory actions.
RBI’s Regulatory Concerns
The Reserve Bank of India (RBI) raised concerns about money and transaction data flow between Paytm Payments Bank and Paytm. Despite warnings, Paytm failed to address these issues, leading to a further deterioration of investor confidence.
Ownership and Governance Issues
RBI highlighted governance issues surrounding the shareholding pattern of Paytm Payments Bank, particularly the unilateral decision-making authority of Vijay Shekhar Sharma. The overlap between Vijay Shekhar Sharma’s roles and regulatory guidelines raised red flags regarding corporate governance practices.
Chinese Investments and Data Concerns
The presence of Chinese investments, notably Ant Group’s continued stake in Paytm, became a contentious issue. RBI cited concerns about data sharing with China, adding to the regulatory pressure on Paytm.
Stakeholder Landscape
Apart from Chinese entities, various foreign and domestic investors hold significant stakes in Paytm. Safi Lee Mauritius Company Limited, Resilient Asset Management, and Svf India Holdings are among the top foreign investors. Meanwhile, retail investors and Axis Trustee Services Limited also play a crucial role in the company’s ownership structure.
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