Paytm seeks shareholders’ approval to raise $1.6 Bn via fresh issue in IPO

Paytm has sought shareholders’ approval to raise capital through an initial public offering of equity shares. The proposed offering is likely to include a fresh issue of equity shares aggregating to Rs 12,000 crore or $1.6 billion alongside an offer for sale of an undisclosed number of shares by its existing shareholders. 

The company has sent a notice to shareholders informing them about an extraordinary general meeting (EGM) to be held on July 12. The first agenda of the meeting was to approve the resolution to raise capital through an initial public offering of equity shares. 

Entrackr has reviewed a copy of the notice for the EGM.

The notice states that there would be no change in control of One97 Communications or its management due to this fundraising. Importantly, Vijay Shekhar Sharma will be  declassified as the “Promoter” of the company and will be addressed as the  “Founder” of One 97 Communications in further official communications including in the annual reports of the company for FY21. 

Sharma currently holds 9,051,624 equity shares of the company amounting to a 14.61% stake in  Paytm’s holding entity which has an aggregate of over 1000 shareholders.

Also read: Paytm shrinks losses by 42% in FY21 but operating revenue falls to the tune of 15%

Further, the notice states that Paytm is seeking the approval of the shareholders to complete a pre-IPO private placement round prior to the filing of the draft red herring prospectus (DRHP) with the RoC and SEBI. The number of shares to be issued in the pre-IPO round and their pricing has not been disclosed yet. 

On June 7, Paytm said that it received in-principle approval from its board to go ahead with its IPO plan. According to the company, it aims to raise money by issuing fresh equity in the IPO, and also sell existing shareholders’ shares at the event. Moreover, Paytm will also allow its employees to sell their stake in the SoftBank and Alibaba-backed company.