Ant Group Co. is considering selling a portion of its holdings in Paytm's parent firm in order to maintain its holdings below a necessary threshold, reported Bloomberg citing people familiar with the matter. This is after One 97 Communications Ltd.'s share percentage increased passively due to share buybacks. The Chinese fintech behemoth has been discussing alternatives to lower its investment in the company, the report said.
According to the people, discussions are in their early stages, and specifics may change in response to regulatory and pricing issues.
This comes as Ant affiliate Alibaba Group Holding Ltd. also sold its stake in Paytm. Alibaba Group has been retracting back investments in India amid growing geopolitical tensions. However, according to the report, reason's Ant’s sales would be for technical and not political.
Also Read: Share Price Of Paytm Plunges 8 Per Cent, Alibaba Group Offloads Entire 3.4 Per Cent Stake: Report
The report said that as of December, Ant held 24.86 per cent of One 97, but its holdings rose above 25 per cent after the repurchase reduced the number of shares outstanding, one of the people said. Adding that Ant has a 90-day window to cut its stake after the completion of the buyback on February 13.
In December, One 97 announced a share buyback of as much as Rs 8.5 billion ($100 million).
As Ant intends to pull its investments, Indian telecom giant Sunil Mittal is reportedly looking to acquire a share in Paytm by combining his financial services business with the payments bank of Paytm. According to the report, Mittal wants to merge Airtel Payments Bank with Paytm Payments Bank through a stock deal and also buy Paytm shares from other shareholders.
Airtel and Paytm may not achieve an agreement at this point in the negotiations, the report added.
According to Bloomberg, to create a network of payment services across Asia, Ant has invested in 10 fintech wallets outside of mainland China.
In China, Ant is awaiting a green light to apply for a financial holding company license that would ensure it can continue its fintech operations. In a sign of progress, regulators recently allowed the firm’s consumer lending affiliate to increase capital.