One 97 Communications (Paytm) has approved a proposal to raise up to ₹2,250 crore via a rights issue in its wholly-owned subsidiary, Paytm Payments Services Ltd (PPSL).
The raised capital is intended to be used to strengthen PPSL’s net worth, fund the acquisition of Paytm’s offline merchant payments business, and support working capital requirements.
PPSL has also received an “in-principle” approval from the Reserve Bank of India (RBI) to operate as a Payment Aggregator (PA), making the capital raise timely for regulatory conformity.
The transaction aims to be completed by 31 December 2025, subject to necessary approvals.
Why this matters
- The rights issue indicates Paytm’s push to consolidate its payment business under PPSL, aligning with RBI’s norms for payment aggregators which mandate businesses to consolidate operations in a single licensed entity.
- Given Paytm’s Q2 FY26 results (revenue up ~24% YoY but profit modest at ₹21 crore) the raise signals a strategic move to bolster core operations and scale up merchant payments. Business Standard
- From an investor perspective, the rights issue may dilute existing shareholding but is aimed at strengthening business foundations and meeting regulatory/regulatory-compliance demands.
Key considerations
- Although the amount is “up to” ₹2,250 crore, actual issuance will depend on approvals and investor demand.
- The rights issue to a subsidiary (PPSL) means structural and corporate changes for shareholders; monitoring how the issuance is structured (ratio, pricing) is important.
- Paytm’s ability to translate the capital infusion into growth in merchant payments, offline business acquisition, and profitability will determine the effectiveness of the raise.
- Market & regulatory environment: Payment apps in India face stiff competition, margin pressure, and regulatory scrutiny (e.g., Payment Aggregator rules, gaming business impact).
Outlook
In short-to-medium term:
- Expect detailed rights issue terms (ratio, record date, price) to be announced once approvals are in place.
- Investors will watch how Paytm uses the funds (offline merchant acquisition, device business, working capital) and how quickly PPSL leverages the capital to expand.
- The move could improve Paytm’s positioning in the payment ecosystem, especially merchant payments, device monetisation, and regulatory compliance.
Conclusion
Paytm’s decision to raise up to ₹2,250 crore via a rights issue reflects a strategic attempt to strengthen its payments arm in a regulatory-intensive environment and lay foundations for future growth. Execution will be key: how quickly and effectively the funds are deployed will determine if this raises Paytm’s growth and profitability trajectory.
