Ahead of Paytm's initial public offering (IPO) rollout, several of its top employees are converting their employee stock ownership plan (ESOP) grants into the company’s shares. These shares are worth an estimated Rs 600 crore, according to media reports.
To facilitate this exercise, One97 Communications Ltd, the parent company of fintech major Paytm, is in talks with five banks to enable loans of around Rs 100 crore for the employees converting Esop grants into the company’s shares. The name of the lenders and the exact credit size hasn't been revealed yet.
The move comes after the Vijay Shekhar Sharma-led company was received requests for conversion from its employees. Besides, such financing will reduce the tax burden on employees during the conversion.
According to the law, an employee is taxed for conversion of Esop grants into the company's shares. This tax is calculated based on the difference between current share prices versus those at the time of Esop. Additionally, capital gains tax is also levied on employees if they choose to sell their shares.
Paytm is selling its shares at Rs 18,000 and issuing Esop for 12 years, according to an Economic Times report. Significantly, about 80 percent of Esop conversion will be led by senior Paytm employees, the report added.
So far, Paytm officials haven't disclosed their expected IPO valuation but market experts speculate the amount could be as high as $25 billion. Earlier In July, SoftBank and Alibaba-backed Paytm had sought Sebi's nod to raise Rs 16,600 crore ($2.2 billion) through its IPO.
Paytm was last valued at Rs 12 lakh crore. In FY (2020-21), Paytm’s revenue shrank 11 percent to Rs 3,187 crore. However, the Noida-based company managed to cut losses by 42 percent to Rs 1,701 crore.
(Edited by : Ajay Vaishnav)
First Published: IST