Reliance Capital profits 2650% by selling its 1% stake in PayTM

Sources have confirmed to PTI that Reliance Capital is selling its one percent stake in digital payments company Paytm for Rs 275 crore to China-based e-commerce major Alibaba group. The Anil Ambani-led company, which is one of India’s largest in asset management, had first bought this stake for Rs 10 crore – and had also received one percent equity in Paytm’s e-commerce wing, Paytm Mall, free of cost, owing to its investment in the parent company.

Anil Ambani-led Reliance Capital has nearly sold 1% of its stake in the Indian digital payments giant PayTM for a sum of Rs. 275 crore to Alibaba in a recent speculative deal. The financial services arm of Reliance Group has invested Rs. 10 crores for this stake in PaytM in the year 2014. Reliance-Alibaba deal now values PayTM at over $4 billion.

Reliance Capital, controlled by billionaire Anil Ambani, had bought the stake in One97 for 100 million rupees, according to its annual report. The company still continues to own some shares in Paytm E-Commerce Pvt Ltd, the digital goods marketplace company, the source said.

An advertisement board displaying a QR code for Paytm, a digital wallet company, is seen placed amidst vegetables at a roadside vendor’s stall in Mumbai, India, November 19, 2016. Picture taken November 19, 2016. REUTERS/Shailesh Andrade/File Photo

Reliance Capital has also reportedly retained portions of their stake which they got as the remuneration of their previous investments in the mobile wallet contender. The China-based e-commerce giant Alibaba, which already owns the majority in PayTM, was at the receiving end of the deal.

In December the previous year, Vijay Shekhar Shama, PayTM CEO sold his 1% of the share he held at about Rs. 325 crores. The latest deal values PayTM at about Rs 32,500 crore, which amounts to $4.8 billion.

A Reliance Capital spokesperson declined to comment on the deal while Paytm spokesperson also did not comment. Earlier, Reliance Capital had said it would trim its proprietary investment portfolio as part of its plans to monetise non—core assets.

In January, there were some media reports that early investor and former IDFC Securities analyst Nikhil Vora—who holds 0.35%, or 1.6 lakh shares, in Paytm—was in talks with two industrialists to sell his stake in the digital wallet company. Hero Corporate Services chairman Sunil Munjal and Adventz Group chairman Saroj Poddar were negotiating with Vora to buy stake worth Rs 50 crore of stake at Rs 8,000 per share.