Digital payment startup Paytm will seek shareholders’ approval to sell about $1,600,000 in new stocks as part of India’s biggest-ever initial public offering.
The company wants to sell 120,00,000 rupees ($1.61 billion) in new shares, with a 1 percent chance of further allocations, the company said in an announcement at the extraordinary shareholders’ meeting scheduled for July 12 in Delhi.
Bloomberg News reported last month that Paytm, formally called One97 Communications, is joining a global stock sales frenzy with plans to offer $3,000,000 in shares in IPOs.
According to data compiled by Bloomberg, about $4,000,000 has been raised through IPOs in the South Asian country so far in 2021, the best start to the year since 2018.
Paytm had asked its workers earlier this month to formally announce whether they wanted to sell stocks as part of public offers. The company needs notifications before finalizing the prospectus expected to be submitted to the regulator in early July.
Paytm will propose to remove founder Vijay Shekhar Sharma’s role as a “promoter” of the company and thereby reduce their compliance requirements and liabilities. Sharma holds only a 15 percent stake in the company.
That would ensure that the company was not fully under the control of the sole founder, along with private rights.
“There is a special right for founders in a startup as promoters and they generally control the company. This change will be in a position to be managed more professionally as Sharma is one of the shareholders. Any control over the issues or decision-making process of the company can only be used to the extent of its contribution, Paytm said in the memo.
Paytm also said it may consider increasing pre-IPO funding rounds. “In the occasion of pre-IPO placement, the volume of the proposal will be declined to the extent of equity shares issued under pre-IPO placement,” it said. A Paytm spokesperson declined to comment.