Fintech firm Paytm to expand ESOP pool ahead of IPO

Digital payments and financial services firm Paytm is planning to add 3.7 crore shares to the employee stock ownership plan (ESOP) pool through an extraordinary general meeting on September 2, bringing the total pool to 6.10 crore. The information was communicated to the company’s shareholders via a letter.

Under the One97 Employees Stock Option Scheme 2019, the company proposes to increase the ESOP pool by 37,000,000 equity options, bringing the current ESOP pool from 2,409,4280 equity options to 61,094,280 equity options with a face value of Rs 1 each.

This will assist the company in rewarding and recognizing employees who have contributed to the company’s growth. The members approved the most recent increase in the ESOP Pool to the policy on March 26, 2021.

It will also be India’s largest public offering to date, breaking the record previously held by Coal India, which raised Rs 15,000 crore over a decade ago, demonstrating institutional investors’ appetite for new-age internet companies.

Previously, in its meeting on July 14, 2021, the Board of Directors granted approval to the revised employment agreement of Vijay Shekhar Sharma, subject to the approval of the company’s members, based on the recommendation made by the Nomination and Remuneration Committee.

It is also seeking approval for the appointment of Neeraj Arora, Douglas Feagin, and Ash Lilani to the board of directors, as well as the remuneration of non-executive directors.

Paytm filed a draught red herring prospectus with the Securities and Exchange Board of India in July for its proposed Rs 16,600-crore initial public offering (IPO). The company intends to raise Rs 8,300 crore through new equity and another Rs 8,300 crore through an offer-for-sale, according to the document.

Paytm founder Vijay Shekhar Sharma and Alibaba group firms will sell a portion of their stake in the proposed IPO.

The company intends to invest Rs 4,300 crore in expanding and strengthening the Paytm ecosystem, including by acquiring consumers and merchants and providing them with greater access to technology and financial services.
Paytm intends to set aside Rs 2,000 crore for business initiatives, acquisitions, and strategic partnerships, as well as up to 25% of the total funds raised through the IPO for general corporate purposes.

Paytm’s revenue for FY 20-21 was Rs 3,186 crore, down from Rs 3,540 crore the previous year. During the same period, it reduced losses to Rs 1,701 crore from Rs 2,942 crore the previous year.

Paytm is currently India’s second most valuable internet company, with a market capitalization of $16 billion when it raised a billion dollars in November 2019 with the help of T Rowe Price, Discovery Capital, and D1 Capital.

If Paytm goes public at the $25-$30 billion valuation it is aiming for, it will outperform ed-tech firm Byju, which is currently the country’s most valuable private internet company, which is valued at $16.5 billion. 

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