India’s Paytm spends up to $103 million to buy back shares •

by Ana Lopez

Paytm will spend up to $127 million to buy back its shares, the company’s board of directors approved on Tuesday, as the Indian financial services firm tries to calm investors after a tumultuous period that has lost about 60% of its value this year. shares wiped out.

The Noida-headquartered company, which went public late last year, made the proposal last week, a move that saw its shares gain momentum. The stock ended the day at 538.4 Indian rupees, or $6.53. Paytm debuted at 2,150 Indian rupees ($26) and has not recovered even half as of January 17. The stock fell slightly on the news Wednesday.

The board members “unanimously” approved the company’s proposal to repurchase fully paid-up shares at a price not exceeding 810 Indian rupees ($9.82) and to issue $103 million excluding taxes and other expenses to acquire the shares. buy back, Paytm revealed on a stock exchange filing.

Buybacks are not uncommon and are generally seen as a way for companies to reward their shareholders. Many companies have bought back their shares this year to take advantage of falling prices in public markets worldwide. But it is not common among loss-making companies.

“There has been clear business momentum over the past year and we are ahead of our plans. Looking at the monetization opportunities in our core payments and credit businesses, we are confident to generate healthy revenues and cash flows to invest in sales, marketing and technology. We value our shareholders and their journey with us in the public markets. I believe a buyback at this stage will be hugely beneficial to our stakeholders and drive long-term shareholder value,” said Vijay Shekhar Sharma, founder and CEO of Paytm, in a statement.

Paytm will have to use money from its books to buy back the shares. Indian law prohibits the company from using the proceeds from the IPO raise for buybacks. In a statement earlier Tuesday, Paytm said it maintains “excess liquidity” and has ensured all of its cash needs are “adequately budgeted”.

“Management is confident in strong operational performance and remains focused on creating long-term value for its shareholders,” the company said. Paytm had approximately $1.116 billion in the bank at the end of September.

Paytm’s archrival PhonePe, which is also unprofitable and generates significantly lower revenues, is in later stages of deliberations to raise about $1 billion from majority shareholder Walmart and others including General Atlantic at a valuation of $12 billion, according to a source. familiar with the case. Indian news outlet MoneyControl first reported on the financing talks last month.

Paytm, which was valued at $16 billion in a private fundraising in 2019, currently has a market cap of approximately $4.2 billion.

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