BENGALURU: Financial services firm PayTM may get large overseas institutional investors to participate in the USD 1.6 billion (Rs 12,000 crore) primary share sale round ahead of its USD 3-billion public listing on domestic exchanges in November.
In a note to shareholders, PayTM's parent firm One97 Communications said the firm proposes to create, offer, issue and allot fresh equity shares of the face value of Rs 1 each up to an aggregate of Rs 12,000 crore.
The proposed offering may include a fresh issue of the equity shares and an offer for sale by certain existing shareholders. PayTM has also called for an extraordinary shareholders meeting on July 12.
Sources privy to the development said PayTM's latest funds raise is aimed at building a block for large institutional investors at a discounted rate to the IPO valuation, which will also have a one-year lock-in period after listing.
Large institutional buyers from the US and Europe are expected to participate in the pre-IPO primary round. This won't impact the IPO size but could split the primary raise and offer for sale component in the IPO, said Ashvin Chadha, co-founder, Anicut Capital.
Neeraj Dubey, partner, Singh and Associates, said the pre-IPO rounds generally bring in new investors on board and undergo some structural changes before going public. Notably, PayTM's founder and CEO Vijay Shekhar Sharma has sought declassification as a promoter. Sharma currently holds 90.51 lakh equity shares amounting to 14.61 per cent stake.
Sharma is also seeking a loan of Rs 740 crore to fund his acquisition of RahejaQBE general insurance company through a subsidiary, which will be funded by the parent firm. China’s Alibaba and Ant Financial have a 37 per cent stake in the firm followed by Softbank (19.6 per cent), Elevation Capital (18.6 per cent) and Vijay Shekhar Sharma (14.8 per cent).
EGM on July 12
PayTM will hold an Extraordinary General Meeting (EGM) on July 12 to seek shareholders’ nod to raise up to Rs 12,000 crore through issuance of fresh equity. The EGM will also seek approval for declassifying Vijay Shekhar as a promoter. Shekhar is the Founder and Managing Director of Paytm