Paytm is asking its employees if they want to sell stock in the digital payments company’s planned initial public offering, a step closer to what could be the country’s largest stock market debut ever.
According to documents reviewed by Bloomberg News, the startup, formally known as One97 Communications Ltd., sent the “offer for sale” to its employees on Monday as it prepares to file for an IPO. According to a source familiar with the situation, Paytm’s board has approved the offering plans in principle and is finalising the draught red herring prospectus, which could be filed as early as the first week of July.
One97 Communications “is proposing to undertake an initial public offering of its equity shares (“Equity Shares”), subject to market conditions, regulatory, corporate and other approvals, and other relevant considerations, in accordance with applicable law, and has received an in-principle approval from the board of directors of the Company in this regard,” Amit Khera, One97’s secretary, said in the notice to employees and shareholders.
Bloomberg News reported in May that the company, whose investors include Berkshire Hathaway Inc., SoftBank Group Corp., and Ant Group Co., is looking to raise about 218 billion rupees ($3 billion) at a valuation of $25 billion to $30 billion. In 2010, Coal India Ltd. raised more than 150 billion rupees in the country’s largest initial public offering (IPO).
One97, which was recently valued at $16 billion by unicorn tracker CB Insights, is part of a new wave of promising Indian startups. During one historic week in April, six startups achieved unicorn status in the tech industry, with valuations of $1 billion or more.
To comply with Indian regulatory requirements, Paytm’s public market debut will include a mix of new and existing shares. According to the country’s regulations, 10% of shares must be floated within two years and 25% within five years.
Employees will be able to sell their shares as part of the IPO through the offer for sale, or OFS. According to the documents, Paytm’s board of directors has given preliminary approval to the debut, but formal approval will not come until the prospectus is finalised.
According to the documents, if existing shareholders want to sell more stock in aggregate than was allowed during the IPO, their ability to sell stock will be determined on a pro-rata basis.
On the offering, Morgan Stanley is collaborating with Paytm. Paytm did not respond to a request for comment on the listing.
Employees can participate in the IPO by consenting to offer all or part of their equity shares, a decision that would need to be finalized before the filing of the first of the offering documents to the country’s regulator. Equity shares not sold during the offering would be locked-in for a one-year period, the notice said.
