BackAhead of share sale, Paytm in talks to raise $268 million
Payments firm will look to tap institutional investors and sovereign funds for the fundraise
PremiumBENGALURU : Paytm’s parent One97 Communications Ltd (OCL) is in talks with several investors to raise $268 million ahead of its planned public listing on the domestic exchanges by November, said three people aware of the discussions.
It will look to tap institutional investors and sovereign funds for the fundraise, one of the three people cited above said, requesting anonymity.
The pre-IPO funding round is part of OCL’s primary fundraise that will be done through a fresh issue of shares.
On Monday, shareholders approved at an extraordinary general meeting (EGM) the plan to raise up to ₹12,000 crore through a fresh issue of shares.
Mint first reported on 31 May that Paytm was looking to raise $1-1.5 billion by selling new shares to qualified institutional buyers. The primary issue is solely to infuse growth capital in the 11-year-old entity, people familiar with the matter had said.
“SoftBank and Ant Financial together are considering offloading their shares worth ₹8,300 crore (or $1.1 billion) during the IPO process, as a part of the secondary placements. The total size of the IPO could be larger than the ₹16,600 crore as estimated before," said the second individual cited above.
Details of the secondary issue of shares by the current shareholders will be known closer to listing.
OCL will issue its draft prospectus later this week, said the first person cited above. This will also see the company announce a nine-member leadership team, the person said. This includes Madhur Deora, president and group chief financial officer; Vikas Garg, CFO; Renu Satti, head of offline payments; Bhavesh Gupta, head of Paytm’s lending business; and Harinderpal Singh Takhar, CEO, Paytm Labs.
During Monday’s EGM, shareholders also approved a proposal that founder Vijay Shekhar Sharma would no longer be identified as the company’s ‘promoter’. This is to comply with Securities and Exchange Board of India rules requiring promoters of listed firms to have at least 20% of post-issue capital. Currently, Sharma holds 9,051,624 equity shares, or 14.61% of OCL’s total paid-up equity capital.
Sharma will continue to be the chairman, managing director and chief executive officer of the company.
Shareholders also approved OCL’s new articles of association, which include changes to its board and other shareholder rights. The changes are to bring the articles closer to that of a publicly listed company, said the third person cited above.
Paytm has about 1,000 shareholders across institutional investors, employees, former employees and others.
Earlier this month, OCL reshuffled its board ahead of the share sale, replacing Chinese nationals with Indian and US nationals. It brought in Douglas Lehman Feagin, senior vice-president at Ant Group, to its board, replacing Ant Group chairman and chief executive officer Jing Xiandong. It also appointed industry veteran Ash Lilani as an independent director.
Further, Michael Yuen Jen Yao from Alibaba Group Holding and Todd Anthony Combs, investment manager at Berkshire Hathaway, retired by rotation from the board, showed company filings.
Alibaba Group and its payments arm Ant Financial hold almost a 37% stake in Paytm. SoftBank, through its SoftBank Vision Fund, and Elevation Capital (formerly SAIF Partners) holds almost 20% stake each in the entity.
Last week, Mint reported that two senior executives have quit Paytm, joining the growing list of top management personnel who have left the company over the past two years.
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