Morgan Stanley Acquires Paytm Shares Valued at Rs 244 Cr

Morgan Stanley, a leading financial services firm, has bought 0.8% stake in One97 Communications, the parent company of Paytm, for Rs 244 crore through an open market transaction on Friday. The deal comes amid regulatory challenges faced by Paytm Payments Bank, which was barred by the RBI from offering some banking services for non-compliance.

According to the bulk deal data on the NSE, Morgan Stanley Asia (Singapore) Pte – ODI purchased 50 lakh shares of One97 Communications at an average price of Rs 487.20 per share. The shares of One97 Communications have plunged 40% in two days after the RBI issued a directive to Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29. The company expects the RBI’s action to have a worst-case impact of Rs 300-500 crore on its annual EBITDA.

Paytm Payments Bank is an associate of One97 Communications, which holds a 49% stake in it. The bank offers savings and current accounts, debit cards, UPI, money transfer and other services to its customers. The RBI’s directive was based on its inspection findings that revealed several violations of regulatory norms by the bank, such as inadequate KYC documentation, multiple accounts with same identity document, and non-adherence to net worth requirements.

The RBI’s action has raised concerns over the governance and compliance standards of Paytm, which is India’s largest digital payments platform with over 350 million users. Several brokerages have downgraded the stock of One97 Communications after the RBI’s move. Jefferies has given a target price of Rs 500 and Motilal Oswal Securities has given a target price of Rs 575 for the stock.

However, Morgan Stanley’s purchase of Paytm shares indicates that the financial services giant sees value in the company despite the regulatory hurdles. Morgan Stanley is one of the largest investors in Indian startups and has backed companies like Flipkart, Ola, Zomato and Byju’s. The deal also reflects the growing interest of global investors in India’s digital economy, which is expected to reach $1 trillion by 2025.