Explained: Paytm IPO and the road ahead

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Paytm IPO is likely to be launched by Diwali while it's the draft red herring prospectus (DRHP), filing could be in middle of this year. The extraordinary general meeting (EGM) notification has raised 2 important points - first by way of the secondary issuance and the second the professionally managed company’s status.

Paytm IPO is likely to be launched by Diwali while it's the draft red herring prospectus (DRHP), filing could be in middle of this year.
The extraordinary general meeting (EGM) notification has raised 2 important points - first by way of the secondary issuance and the second the professionally managed company’s status.
In the secondary issue, where existing shareholders will sell their shares, it will raise to bring the total to Rs 16,600 crore.
The shareholders also approved to declassify Vijay Shekhar Sharma as the promoter in the EGM. However, since he does not have the required minimum 20 percent stake in the company, he will require SEBI’s approval to be declassified as the promoter.
However, another aspect is that the two big investors in Paytm Alibaba and Ant Group own together 37 percent stake and they will have to reduce their stake in order to be below that 25 percent mark so that the company can be called a professionally managed company and there goes the secondary it which is also quite larger.
The one thing to note here is that SEBI will have to really look at both these companies - the two investors at two entities for this to happen, otherwise, the dilution required could be much larger ahead of the IPO.
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