Paytm aims to raise $1.6B with fresh shares in IPO

One97 Communications, the parent company of Paytm, is planning to issue fresh shares worth Rs 12,000 crore, or $1.6 billion, in its forthcoming initial public offering (IPO). 

It also intends to declassify its founder Vijay Shekhar Sharma as a promoter, the company told its shareholders in a note ahead of its upcoming extraordinary general meeting (EGM) in July. The company did not mention share sales by existing shareholders in Friday’s note.

“The founder’s letter further highlights that the founder currently holds 9,051,624 equity shares of the company amounting to 14.61% of the total paid-up equity share capital of the company on a fully-diluted basis, and can exercise any control over the affairs or the decision-making process of the company only to the extent of his shareholding,” the company added in its note.

China’s Ant Group and Alibaba own close to 38% of One97 Communications, while SoftBank holds 18.73%. Elevation Capital has a 17.65% stake.

On June 7, the Noida-based fintech firm wrote in a letter to the shareholders that it was considering a mix of fresh issuance and offer for sale (OFS) for shareholders for the company’s IPO, scheduled for later this year.

“…is hereby accorded to create, issue, offer and allot such number of Equity Shares, for cash such that the amount being raised pursuant to the fresh issue aggregates up to ₹12,000 crores (“Fresh Issue”) (with an option to the Company to retain an over-subscription to the extent of 1% of the net Offer (defined below) size,” Paytm told its shareholders in the note, adding that the matter would be considered in its EGM on July 12.

Paytm has listed five “special businesses” to be resolved at the EGM. Concerns about the restructuring of employee stock options and adopting of new articles of association (AOA) will also be addressed, according to the note.

Paytm tries to go public by November and is looking to file its draft red herring prospectus with the Securities and Exchange Board of India, by next month. 

Established by Sharma, Paytm is presently the second highest-valued startup in India at $16 billion, behind edtech startup Byju’s, which is now valued at $16.5 billion.

Losses, however, narrowed to Rs 1,701 crore during the period, from Rs 2,942 crore in the financial year 2020. In a different letter to shareholders on Sunday, Paytm also said that it was intending to break even by the end of FY22.

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