Paytm, Adani Group Dismiss Rumors of Selling Stakes: What You Should Know

by | May 29, 2024 | 0 comments

On May 29th, 2024, a newspaper publication sent shock waves in the Indian fintech ecosystem. According to Times of India, Gautam Adani, the chairman of Adani Group- a consortium with its fingers on ports and airports and energy- was planning to buy shares from the parent company One 97 Communications that owns Paytm. This would have completely changed financial technology among others. These rumors have however been denied by both Paytm and the Adani group leaving more questions than answers.

What Were the Rumors?

According to The Times of India report for example, Vijay Shekhar Sharma who is the founder and CEO of Paytm had met Gautam Adani at Ahmedabad’s headquarters as per May 28th. In this regard, it can be concluded that these two businessmen were ironing out details about “the contours of a deal” whereby Adani Group would acquire a stake in One 97 Communications.

This potential link-up had serious consequences. Such an alliance would signify that Adani Group has entered into India’s booming fintech market making it compete head on with old hands like Google Pay and PhonePe (owned by Walmart) as well as Mukesh Ambani’s Jio Financial Services. On the other hand, partnering with Adani Group could have been redeeming for Paytm which has been buffeted by recent headwinds including regulatory restrictions and withdrawal of major lending partners.

Denials by Paytm & Adani Group

The rumors did not last long enough. Both paytm.comand issued statements denying any discussions regarding their equity stakes being sold off. One 97 Communications filed such information in response to regulatory disclosure requirements with stock exchanges stating that

“The company is not engaged in any discussions in this regard”. Similarly calling such rumors “baseless” and “totally false and untrue,” the Adani Group.

Paytm’s Recent Challenges

The rumored sale of stakes coincided with a period of challenge for Paytm. In January 2024, the Reserve Bank of India imposed certain restrictions on Paytm Payments Bank (PPBL) due to its repeated non-compliance with regulations. Among these were total prohibition of accepting deposits from new customers and processing any loan deals among many others. Furthermore, media reports revealed that Paytm had lost key lending partners such as Aditya Birla Finance, Piramal Finance, and Clix Capital following RBI actions against it. This situation led to a sharp decline in the company’s share price which was already down by over 50% since the beginning of this year.

Against this background, a tie-up with Adani Group that is financially strong would have been a life saver for The excellent performance by the Adani Group during its revival after market slump has also increased speculation about how beneficial such an agreement could be for Paytm.

What Now?

Although there is no smoke without fire in the rumour mills about selling stakes, they reveal financial technology being dynamic in India. As Paytm strives to regain investor confidence amidst current headwinds, it must not look back but concentrate on moving forward. Meanwhile adanigroup.inmay be thinking about other ways in which it might enter into fintech space too. Be that as it may, irrespective of what part of this particular whisper was true, one thing is clear: The Indian fintech industry is set for some exciting developments in coming months.

Key Takeaways

  • There is currently no deal between Paytm and the Adani Group.
  • Both companies have denied any ongoing discussions.
  • Paytm has faced recent challenges, and a potential partnership with the Adani Group could have been beneficial.

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