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Paytm board approves Rs 850-crore share buyback at up to Rs 810 per share


The board of One 97 Communications Ltd, which owns Paytm, has approved buyback of shares worth up to Rs 850 crore at a maximum price of Rs 810 apiece via the open market route, the company said in a stock exchange filing late Tuesday.

The maximum buyback price of Rs 810 per share is roughly 50% higher than the stock’s closing price of Rs 539.50 on the BSE on Tuesday and is expected to be completed within a maximum period of six months, it said.

This will be Paytm’s first share buyback since its listing last year.

The development comes at a time when One 97 Communications’ stock price has been severely battered. The company had raised Rs 18,300 crore at an issue price of Rs 2,150 per share through its initial public offering (IPO) in November last year.
The digital payments platform said it would detail the timeline of the buyback at a later date.

Through the process, Paytm plans to buy back 10.49 million shares, which represent approximately 1.62% of its paid-up share capital, as of FY22 end.

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The buyback size represents 6.67% and 6.97% of the aggregate of the total paid-up equity capital and free reserves of the company, respectively, it said.

Since this is not more than 10% of the total paid-up capital and free reserves of the company, it won’t require approval of the shareholders, Paytm said in its filing.

The financial services company is expected to purchase a minimum of 5.246 million equity shares as a part of the exercise.

Shares of One 97 closed 2.16% higher at Rs 539.50 apiece on BSE on Tuesday. The stock has dropped about 75% from its IPO price of Rs 2,150 as Paytm’s losses widened and SoftBank Group Corp lowered its stake in the company.

Last month, Softbank sold a 4.5% stake in the company, comprising 29.5 million shares, for roughly Rs 1,631 crore (or $200 million). The lock-in period for pre-initial public offering investors of Paytm had ended on November 15.

In a statement, the company said its board of directors unanimously voted in favour of the proposal, including all independent directors.

“While Paytm will continue disciplined investments to drive long-term value creation across technology, sales, marketing, and other areas, the Paytm board has determined that there is surplus liquidity that can be productively applied to a buyback of shares,” the company said.

“This decision has been taken after a detailed review of projected investment requirements to drive long-term value creation. Paytm reiterates that proceeds from the IPO are not being directed towards the share repurchase plan,” it added.

Shares of One 97 had plunged to a record low of Rs 439.60 on the BSE on November 24 after Macquarie Group Ltd analysts flagged risks from billionaire Mukesh Ambani’s foray into the financial services business.

The company also said in its statement that until completion of the buyback period, its directors and key management personnel including founder and CEO Vijay Shekhar Sharma, and group CFO Madhur Deora, will not be participating in any sale of shares.

Earlier this week, the company released data on its operation performance and said it had clocked an annualised loan disbursal run rate of $4.8 billion (or Rs 39,000 crore) in November.

It said the total merchant gross merchandise value (GMV) processed through its platform in October and November this year aggregated to Rs 2.28 lakh crore ($28 billion). Further, the number of merchants paying subscriptions for Paytm payment devices exceeded 5.5 million, it said.

For July-September quarter, One97 Communications said its revenues rose to Rs 1,914 crore ($233.81 million) from Rs 1,086 crore a year earlier. Its consolidated net loss, though, widened to Rs 571 crore from a loss of Rs 473 crore for September 2021 quarter as expenses related to employee benefits and payment processing charges surged.

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