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June 16, 2024

Marshall Wace Sells Stake In Paytm in INR 25 Cr Block Deal

On June 14, UK-based hedge fund Marshall Wace sold 585,938 shares of fintech leader Paytm for INR 25.08 crore in a block deal. According to data from the National Stock Exchange (NSE), the shares were sold at INR 428.05 each and were acquired by BNP Paribas Financial Markets, an affiliate of the global financial services giant BNP Paribas.

Context of the Sale

This significant transaction occurs amid a period of selling pressure on Paytm, largely attributed to regulatory challenges. The Reserve Bank of India (RBI) had earlier imposed restrictions on Paytm Payments Bank, citing “material supervisory concerns.” Despite these hurdles, Paytm’s stock has shown resilience, experiencing a notable rise in the past week. The company’s shares closed the week 11.5% higher at INR 424.90 on the Bombay Stock Exchange (BSE), marking its first close above INR 400 since April.

Recent Developments

Despite the pressure, there have been several positive developments for Paytm. The company recently faced allegations regarding forced resignations and the retrieval of paid bonuses. While Inc42 reported that Paytm was urging employees to resign voluntarily or face disciplinary actions, the company has denied these claims.

In a strategic move, Paytm announced a partnership with Samsung Wallet. This collaboration allows Galaxy smartphone users to access Paytm’s services directly through Samsung Wallet, including bookings for flights, buses, movies, and events. This integration is expected to enhance user convenience and expand Paytm’s service reach.

Additionally, the Insurance Regulatory and Development Authority of India (IRDAI) has accepted Paytm General Insurance’s application to withdraw its registration. This strategic shift allows Paytm to concentrate on distributing insurance products from other insurers rather than managing its own insurance arm.

Financial Performance

Despite these strategic efforts, Paytm’s financial performance has been underwhelming. The fintech giant reported a threefold increase in net loss, amounting to INR 550.5 crore for the March quarter (Q4) of the financial year 2023-24, compared to INR 167.5 crore in the same period the previous year. Furthermore, revenue from operations saw a year-on-year decline of 2.9%, totaling INR 2,267.10 crore during this period.

Overall, Paytm’s stock remains over 33% lower year to date, reflecting investor concerns amidst regulatory scrutiny and financial challenges.

Market Implications

Marshall Wace’s offloading of Paytm shares underscores the ongoing uncertainties surrounding the fintech major. The transaction might signal caution from institutional investors due to the regulatory landscape and Paytm’s recent financial performance. However, the acquisition of these shares by BNP Paribas Financial Markets indicates continued interest and confidence in Paytm’s long-term prospects within the financial markets.

In summary, while Paytm navigates through a complex regulatory environment and works to improve its financial standing, partnerships like the one with Samsung Wallet and strategic shifts in its insurance business highlight its efforts to stabilize and grow. Investors will be closely watching how these developments play out and their impact on Paytm’s market position and stock performance.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

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