Paytm forms JV insurance firm
The board of One 97 Communications Limited (OCL), the parent of Paytm, has approved an investment of up to Rs 950 crore in Paytm General Insurance Limited (PGIL), a joint venture, for a stake of 74%.
The investment will be made in tranches over a period of 10 years. In a regulatory filing, the company said OCL will hold a stake of 49% PGIL in the initial phase, with the remaining 51% being owned by VSS Holding Private Limited (VHPL), owned by Vijay Shekhar Sharma, managing director, OCL.
Post the investment, OCL will hold 74% in PGIL, lowering VHPL’s stake in the insurance venture to 26%. PGIL will be a subsidiary of OCL.
The OCL board also reappointed Sharma as the company’s managing director for a period of five years until December 18, 2027. Madhur Deora, the company’s Group CFO and president, was appointed to the board as a whole-time director for the next five years.
The general insurance venture comes after OCL’s attempt to acquire Mumbai-headquartered Raheja QBE General Insurance Company Limited fell through.
On Friday, the digital financial services player reported a loss of `780 crore for the March quarter due to higher expenses related to payments processing, marketing and employee benefits.
Revenue grew 89% year-on-year to Rs 1,541 crore, while the Ebitda (before ESOPs) for the quarter increased by 12% y-o-y. For FY22, the revenues jumped by 77% to Rs 4,974 crore.
The company’s Ebitda loss (before ESOP) for FY22 narrowed Rs 1,518 crore from Rs 1,655 crore the previous year.
The company believes it will show accelerated reduction in Ebitda losses and is on track to achieve profitability (before ESOP) by September 2023 quarter.
The OCL stock has lost more than 50% this year following a bearish phase in tech stocks in global markets and also due to regulatory issues faced by the company.
“PGIL intends to register for and undertake general insurance business. PGIL is yet to commence its general insurance business, which is presently subject to receipt of certificate of registration from Irdai (Insurance Regulatory and Development Authority of India),” the filing with the stock exchanges said.