The Paytm-Antfin deal is likely to India's biggest buy now, pay later deal! It will involve a cash outgo, but only later, sources with knowledge of the matter told CNBC-TV18.

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Paytm had announced on Monday that promoter Vijay Shekhar Sharma will acquire 10.3 percent of Antfin's stake in the company through an entity controlled by him. In return, the entity will issue Optionally Convertible Debentures to Antfin.

The sources further said that neither were there any assured returns guaranteed to Antfin in the past, or they are promised as part of the OCD agreement. "There is no fixed return committed to Antfin," the source said.

It will be wrong to say that there will be no cash outgo as since there is transfer of equity involved in the transaction, the payment will have to be made later, according to the source.

The source added that Paytm has long committed OCDs to Antfin which run into "many many years."

Post the completion of this transaction, Antfin's stake in Paytm will fall to 13.5 percent. Sources said that while the Antfin stake is now within touching distance of slipping below the 10 percent mark, there is no such plan in the works in the near term.

Antfin will now cease to be the largest shareholder in Paytm, with its stake being reduced to 13.5 percent. Post the transaction, Vijay Shekhar Sharma's stake in the company will increase to 19.42 percent.

This means Antfin's economic interests in Paytm will remain unchanged.

In case Paytm's shares fall in the future, Ant can redeem these debentures at the price at which they were issued, thereby preserving its principal.

However, in case the shares rise in value, Antfin can convert these debentures into equity and still enjoy the upside in the stock.

This means that while Antfin's stake will reduce to 13 percent after this transaction is complete, it will have to option to increase its stake in the company at a later date.

First Published:Aug 8, 2023 2:35 PM IST