The repurchase is at a 50% premium to the company’s shares, which finished at Rs 539.50, up 2.16 percent, on the BSE on Tuesday. However, the repurchase price is 62% lower than the IPO price of Rs 2,150 per share.
On Tuesday, the board of One97 Communications, the firm that owns Paytm, approved a repurchase of the company’s equity shares for up to Rs 850 crore at a price not exceeding Rs 810 per share. The company, which is funded by Ant Group and Softbank, had Rs 9,180 crore in cash and equivalents at the end of September.
The business stated that the repurchase will take place in the free market via the stock exchange mechanism, but that it will use at least 50% of the targeted funds, or Rs 425 crore. According to an exchange filing, the corporation would purchase a minimum of 5,246,913 equity shares based on the minimum repurchase size and maximum buyback price.
In contrast to a tender offer, purchases in an open-market offer are made through the stock exchange, and the price might fluctuate.
During the repurchase period, the business’s directors and senior management staff will not sell any shares, according to the corporation.”While Paytm will continue to make rigorous investments in technology, sales, marketing, and other areas to drive long-term value development,” it added.
Paytm noted, “This decision was reached following a thorough study of expected investment requirements to boost long-term value growth.” “The Paytm board believes that this buyback demonstrates the company’s confidence that it is on a clear path to attaining cash flow profitability, and that the buyback will not have any effect on its relatively close growth or cash flow aspirations,” the company claimed.
According to Paytm, the suggested maximum number of shares purchased back at the maximum buyback price and maximum repurchase size would be 10,493,827 shares, representing 1.62 percent of the company’s paid-up share capital as of March 31, 2022. “If the shares are purchased at a price lower than the maximum repurchase price, the actual number of shares purchased may exceed the maximum buyback shares, but will always be subject to the maximum buyback size,” the company stated.
The business intends to use at least half of the funds set aside as the maximum repurchase size — Rs. 425 crore — for the buyback (minimum buyback size). The corporation would acquire a minimum of 5,246,913 shares based on the minimum repurchase size and maximum buyback price. A buyback committee has been formed by the board to oversee and carry out the buyback.
The total merchant GMV handled through its platform for the two months ending November 2022 totaled Rs 2.28 lakh crore, representing a 37% increase year on year.