China’s Alibaba Group sold a 3.1% stake in Indian digital payments firm Paytm for a total of $125 million through a block deal. Shares of the company fell as much as 8.8% to 528 rupees in afternoon trading, and was last down 5.8%. Alibaba, which held a 6.26% stake in Paytm as of end-September, sold the stake at 536.95 rupees apiece. Paytm’s stock has risen about 9% this year up to last close, after reporting strong preliminary figures for the third quarter. It closed 2022 with a 60% loss, despite the company announcing a share buyback in December. In November last year, Softbank Group Corp sold a 4.5% stake in the e-payments firm worth $200 million. SoftBank had a 17.5% stake in Paytm as of Sept. 30.
About The Paytm’s IPO Journey:
Formally known as One97 Communications, Paytm listed in 2021 after a mega $2.5 billion initial public offer (IPO). Since then, the stock has plunged around 75% from its IPO offer price as investors started questioning the company’s monetization plans amid worries about sky-high valuations of tech companies and fears of a global economic recession.
Alibaba Exit From Indian Startups:
Alibaba seems to be making an exit from India as it has already sold certain shares in other investments such as BigBasket and Zomato. Paytm is the latest to see a stake sale from this e-commerce giant.
What is a ‘Block Deal’:
Block Deal is a single transaction between two institutional players or two parties of a minimum quantity of 5 lakh shares or at least Rs. 5 Crores in value. This usually happens at the start of trading hours for about 35 minutes through a separate trading window. It has the following features:
- The Deal is comprised of the order of a minimum quantity of 5 lakh equity shares or a value of Rs. 5 Crores.
- All the trades should be delivered as ‘Block Deal’ orders cannot be reversed or even squared off.
- The real price of the share should fall between +1% to -1% of the current market price.