Paytm Singapore Unit has approved the stake sale in PayPay Corporation, a Japanese fintech company. This decision aims to boost Paytm’s consolidated cash balance by $250 million. Moreover, the move aligns with the company’s strategy to concentrate on its core operations, such as payments and financial services.
Details of the stake sale
On December 6, 2024, One97 Communications, which operates Paytm, announced this development. The transaction involves selling Stock Acquisition Rights (SARs) in PayPay. Established in 2018, PayPay is a joint venture between SoftBank and Yahoo Japan, with Paytm serving as its technology partner. The company dominates Japan’s market with a 65% customer share and a 75% merchant share.
Financial impact
This sale will significantly strengthen Paytm’s cash reserves. During the Q1 FY25 earnings call, CFO Madhur Deora confirmed that the carrying value of PayPay SARs was ₹2,000 crore ($250 million). The additional cash flow will enhance the company’s liquidity and provide financial stability for future growth.
Aligning with core business
Paytm has been actively divesting non-core assets to focus on its primary businesses. Earlier in 2024, it sold its entertainment ticketing division to Zomato for ₹2,048 crore. These steps reflect the company’s intention to streamline operations and improve profitability.
Recent achievements
Recently, Paytm has made notable progress. In October, the National Payments Corporation of India (NPCI) allowed the company to onboard new users after a 10-month ban. Today, Paytm ranks as the third-largest third-party application provider in the UPI space, holding a 7% market share.
With regulatory challenges easing and a sharpened focus on core operations, Paytm is strengthening its position in the competitive fintech sector. This stake sale adds momentum to its efforts to enhance operational efficiency and growth.
