Paytm shareholders approve Rs 12,000 cr primary fundraise at company EGM

Vijay Shekhar Sharma declassified as promoter; the company will raise Rs 2,000 cr before IPO

The shareholders of digital financial services firm Paytm on Monday finalised the company’s plan of raising Rs 12,000 crore by issuing fresh equity through an initial public offering (IPO), at its extraordinary general meeting (EGM). The IPO will also comprise a secondary share sale worth Rs 4,600 crore.

According to a source, shareholders approved the proposal that Vijay Shekhar Sharma, founder of Paytm, won’t be identified as “promoter” of the company. He will remain chairman, managing director and chief executive officer of the company. Sharma holds 14.61 per cent equity in the company.

“No single shareholder can have control by virtue of being a founder, etc. No shareholder can have ‘special rights’. There is no agreement that confers such control over the company to the founder or anyone else. That is just how listed companies need to be in India," said the source.

Before the IPO, Paytm will raise $268 million (around Rs 2000 crore) in a pre-IPO round, according to sources.

In addition, the firm plans to issue new shares worth Rs 8,300 crore, said the sources. Existing investors SoftBank and Ant Group will have the option to sell shares worth another Rs 8300 crore.

If successful, Paytm’s could be the biggest IPO by an Indian company, breaking Coal India’s 2010 record of Rs 15,475 crore. Paytm is targeting a valuation of $25 billion- $30 billion, 1.5-1.8 times the current valuation of $16 billion. The IPO is expected in November this year.

The shareholders also approved the new ‘Articles of Association’ of the company according to the required guidelines.

The EGM, too, approved the changes to the Employee Stock Options Plan. The changes are in accordance with the provisions of stock exchanges.

One97 Communications, the parent firm of Paytm, last week said that Douglas Lehman Feagin, senior vice-president at Ant Group, has joined the company’s board, ahead of the IPO. He replaced Ant Group chairman and CEO Jing Xiandong (Eric), according to filings with the Registrar of Companies (RoC) last week.

In addition, Ash Lilani, managing partner at Saama Capital, has been appointed independent director at the company. Michael Yuen Jen Yao from Alibaba Group Holding and Todd Anthony Combs, investment manager at Berkshire Hathaway, retired by rotation from One97’s board on June 30, according to the RoC filings.