Paytm invites shareholders to dilute stake ahead of IPO

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Paytm said that the proposed IPO is contemplated to include a fresh issue of equity shares by the company and an offer for the sale of equity shares by existing shareholders.

Paytm invites shareholders to dilute stake ahead of IPO

Digital payment app Paytm has invited shareholders to tender their equity shares for sale in the initial public listing proposed to be held later this year.

In a letter to its shareholders, One97 Communications Ltd, owner of Paytm said that the company had received in-principle approval from the Board of Directors for the public listing.

CNBC-TV18 had reported on May 31 that the board of One97 Communications Ltd had given the in-principle approval for the listing.

Paytm said that the proposed IPO is contemplated to include a fresh issue of equity shares by the company and an offer for the sale of equity shares by existing shareholders.

"You may, in your sole discretion, participate in the Offer by offering either all or a part of the Equity Shares held by you (which are eligible to be offered in the Offer) in the Offer for Sale. We wish to inform you that the Offer for Sale component has to be finalised before filing the DRHP with SEBI. However, the price band for the IPO will be determined at a later stage, either at the time of filing the RHP (in which case it will be included in the RHP)or prior to the IPO opening for subscription (in which case there will be an advertisement at least two working days prior to issue opening)," the letter said.
It further added that the equity shares that are not sold in the offer for sale shall be locked in for a period of one year from the date of allotment of equity shares in the IPO unless they are exempted shares.
"You will not be able to sell your equity shares during this ‘one-year’ lock-in period,” the letter added.
However, the company also warned that offering shares would not guarantee that they will be sold through the offer, as it will depend on the investor response to the offer.
“Accordingly, any of the offered shares which remain unsold in the offer, will be returned to you and will be subject to the lock-in applicable under the Sebi ICDR Regulations," Paytm said.
As of April 2021, PayTM is the most valuable start-up in the country with a valuation of $16 billion. However, with its public offering, the company is expected to be valued at around $25-$30 billion, nearly doubling in value.
The initial offering would be the largest ever seen in India, as it tries to raise $3 billion. The company is expected to file its prospectus by July.
One97 Communications Ltd. has also proposed to extend funding worth Rs. 743 crore to two companies owned by founder Vijay Shekhar Sharma.

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