Paytm to issue ₹12,000 crore fresh equity shares in IPO

A notice sent to shareholders on Friday said the share sale proposal and others will be put to vote at an extraordinary general meeting on 12 July. Paytm’s parent One97 Communications Ltd, India’s second most-valued startup worth $16 billion, is expected to launch its IPO in late November.

“The company proposes to create, offer, issue and allot fresh equity shares of the company of face value of ₹1 each of the company (the “equity shares”) up to an aggregate of ₹12,000 crore […] The proposed offering is likely to include a fresh issue of the equity shares by the company and an offer for sale by certain, existing shareholders of the company,” the notice said.

On 14 June, Paytm’s board cleared the new share sale plans, and named JPMorgan Chase and Co., Goldman Sachs, Morgan Stanley and ICICI Securities Ltd as bankers or lead book running managers to the IPO.

Mint first reported on 31 May that Paytm was looking to raise $1-1.5 billion by selling new shares to qualified institutional buyers. Through the primary and secondary share sales, the company would be looking to raise slightly more than $3 billion through the IPO, a person aware of the discussions said.

“The upcoming issue of fresh shares will be solely to infuse primary capital in the company. There will be a secondary offer as well, where existing investors would offer their shares,” the person said on condition of anonymity.

The company has about 1,000 shareholders, broadly held by various institutional investors, employees, former employees and others.

The notice also proposed removing founder Vijay Shekhar Sharma’s ‘promoter’ status, complying with Securities and Exchange Board of India (Sebi) rules requiring promoters of listed firms to have at least 20% of post-issue capital. Currently, Sharma holds 9,051,624 equity shares of One97 Communications, amounting to 14.61% of its total paid-up equity share capital. Sharma will continue as managing director.

“The board of directors of the firm is informed that it has received a letter from the founder (Sharma), on declassification of his status as promoter […] the founder does not exercise any control over affairs of the firm and that the board is not accustomed to act solely in accordance with any advice, directions or instructions given by him. The involvement of the founder in the management and affairs of the firm is limited to his professional capacity as an executive director and currently as managing director,” the notice said.

Paytm declined to comment on Mint’s queries on the matter.

Another proposal pertains to amendments to One97 Employee Stock Option Scheme 2019 and its Employee Stock Option Scheme 2008, to comply with Sebi’s listing rules.

“The amendment in ESOP may be cosmetic changes to comply with Sebi rules. Grant price and vesting period and pool size is expected to remain unchanged,” said the person cited above.