Paytm Founder to Get 10% Stake From Ant Without Paying Any Cash

(Bloomberg) — Paytm founder Vijay Shekhar Sharma will acquire a 10.3% stake from China’s Ant Group Co., in an unusual transaction that won’t involve any cash payment or change in economic interest.

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Sharma, who is also chief executive officer of Paytm-parent One97 Communications Ltd., will increase his holding in the company to 19.42%, while Ant’s stake will drop to 13.5%, according to a regulatory filing. But Sharma won’t pay any cash for the equity and Ant will retain the same economic stake through convertible securities, the filing said.

The Indian company’s shares surged as much as 11% Monday. They had rallied 50% this year through Friday’s close.

Sharma took the digital payments pioneer public in 2021 only to see the shares plummet in one of the worst performances for a major initial public offering. Shares closed Friday at 796.6 rupees, compared with the 2,150 rupee offering price.

Paytm and Ant’s relationship may have been strained by geopolitics. India has clashed with China in recent years in a dispute that has hurt Chinese companies’ ability to operate in the neighboring country. This year, India issued orders to block more than 200 apps and websites, largely linked to China.

“As we announce this transfer of ownership, I would like to express my sincere gratitude to Ant for their unwavering support and partnership over the past several years,” Sharma said in statement.