Paytm gets approval for $5.97M investment in payments arm: Reports

Paytm has reportedly received regulatory approval to proceed with a $5.97 million investment in its payments subsidiary Paytm Payment Services, Reuters said, citing unnamed finance ministry officials.

The fintech's payment gateway arm was set to raise additional funds from the parent company, One97 Communications, which was necessary to obtain the payment aggregator license from the Reserve Bank of India (RBI).

However, regulators had put the investment approval on hold after concerns surrounding Chinese company Ant Group's shareholding in One 97 Communications.

Ant Financial invested $575 million for a 25% stake in Paytm in 2015. In the same year, the Chinese payment company's affiliate, Alibaba, acquired a 20% stake, making it once the largest shareholder in the company.

Following several violent border clashes between India and China in recent years, Indian regulators have increased scrutiny of companies with Chinese investors.

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Over the years, both Ant Financial and Alibaba have gradually reduced their stake in the fintech unicorn. In January 2023, Antfin transferred a 10.3% stake in Paytm to Founder and CEO Vijay Shekhar Sharma, making Paytm a majority Indian-owned company.

Japan's Softbank investment arm Softbank Vision Fund exited from Paytm this June at a loss of around $150 million, marking its third full exit from the country, following exit from Zomato and PB Fintech.

Softbank invested about $1.5 billion in One97 Communications, the owner of Paytm, in tranches in 2017.