Sharma will become the single largest shareholder in Paytm.

Vijay Shekhar Sharma, Chairman and CEO of Paytm (NSE: PAYTM), is set to acquire a 10.3% stake worth $628 million in the company he founded. The stake is being purchased from an affiliate of Chinese fintech giant Ant Financial. This move will make Sharma the largest shareholder in the company, with a total holding of 19.42%.

The transaction is aimed at simplifying Paytm’s ownership structure and questions about Chinese ownership in Indian fintech firms. This action also follows the Indian government and regulatory concerns regarding Chinese stakes in Indian fintech companies. (Reuters)

The deal involves Sharma’s entity issuing convertible debentures to Ant Financial. No cash payment will be made for the acquisition. Ant’s stake will be reduced to 13.5%.

Despite a rise in Paytm’s share price after the announcement, the company’s shares remain below their listing price due to doubts about its business model and broader concerns about valuations in loss-making tech companies. In February, Alibaba (HKG: 9988) from China completely divested its share in the Indian fintech. Similarly, Softbank Group Corp (TYO: 9984) from Japan has been gradually reducing its ownership in Paytm through open market transactions, resulting in its ownership dropping to 9.18% after its most recent deal.

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