Paytm plans Rs 850 cr share buyback at Rs 810 apiece

NEW DELHI: The Board of One 97 Communications, the parent company of fintech firm Paytm, in its meeting held on Tuesday, has approved a proposal for the buyback of equity shares of up to Rs 850 crore (excluding buyback taxes and other transaction costs) at a maximum price of Rs 810 per share.

The maximum buyback price of the shares is about a 50% premium to Tuesday’s closing price. The company said it has opted for an open market route through the stock exchange method, which is to be completed within a maximum period of six months.

The fresh move by Paytm comes as its share prices are showing no signs of a pickup. The stock has crashed nearly 75% on exchanges since its listing in November 2021. One97 Communications had listed itself at an initial public offering (IPO) price of Rs 2,150 and on Tuesday closed at Rs 539 on the BSE.

Until the completion of the buyback period, the firm’s directors and key management personnel Vijay Shekhar Sharma (founder & CEO) and Madhur Deora (executive director, President & Group CFO) – will not be participating in any sale of shares. Sharma said, “We value our shareholders and their journey with us in the public markets.

I believe a buyback at this stage will be beneficial for our stakeholders and will drive long-term shareholder value.” Assuming a full buyback of Rs 850 crore and applicable buyback taxes, the total outlay will be in excess of Rs 1,048 crore. Paytm reiterated that proceeds from the IPO are not being directed towards the share repurchase plan. Paytm has a liquidity of 9,182 crores, as per its last earnings report.

Paytm’s buyback plan has been deeply criticised but proxy advisory firms and a few market experts have said that the company should invest the money in business and attain profitability first.  Proxy advisory firm IiAS has said the share buyback plan is a return of equity capital to its shareholders as the company has been reporting cash losses every year.