paytm ipo information: Paytm mortgage to assist fund Vijay Shekhar Sharma’s Raheja QBE deal

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Bengaluru | Mumbai: Paytm’s proposal to mortgage an estimated Rs 740 crore to its founder Vijay Shekhar Sharma’s funding companies will likely be used to finance his buy of Raheja QBE basic insurance coverage firm, sources aware of the matter informed ET.

An early closure of the Paytm-Raheja QBE deal that was introduced almost a yr in the past is essential for the
Paytm IPO slated for November this yr.

The present proposal to lend as much as Rs 740 crore, or round $100 million, to 2 of Sharma’s firms the place he’s a director—VSS Holdings and VSS Investco—is anticipated to assist seal the deal sooner, mentioned the individuals cited above. “The almost $100 million debt will present liquidity to Sharma to really pay for the acquisition,” mentioned one individual within the know of the matter.

‘A number of Restructuring Choices’


“They (Paytm and its founder) are additionally exploring a number of restructuring choices to sew up this deal so it might get IRDA approval sooner,” mentioned the individual cited earlier.

“The complete mortgage is for the insurance coverage deal,” one other individual added.

Paytm declined to remark. An e-mail despatched to Raheja QBE didn’t elicit any response.

Paytm shareholders, who have been knowledgeable concerning the mortgage proposal on June 5, will vote on it through the annual basic assembly (AGM) on June 30. The AGM discover didn’t specify the aim for which the capital was being loaned to Sharma.

Enterprise day by day Mint was the primary to report the mortgage proposal within the AGM discover.

Paytm-Grfx

The Paytm-Raheja QBE deal, which is awaiting regulatory approval by the Insurance coverage Regulatory and Improvement Authority of India (IRDA), will likely be routed by means of Paytm subsidiary QorQl—a three way partnership of Sharma (51%) and One97 Communications (49%).

Part of the mortgage may also be used within the insurance coverage enterprise, sources added.

Regulators are intently scrutinising the possession construction of Indian entities in banking and monetary companies, given latest geopolitical developments, individuals mentioned.

Sharma owns shut to fifteen% in One97, in keeping with its
newest annual report for FY21. In 2016, he offered round 1% of his holding in One97 Communications to finance his holding in Paytm Funds Financial institution. Sharma is almost all shareholder of the funds financial institution, with 51% stake —essential for regulatory clearance—whereas the remainder is owned by One97 and its models.

Mortgage Preparations


Based on the main points within the AGM discover, a duplicate of which has been reviewed by ET, Paytm will provide an inter-corporate deposit/mortgage of near $34 million to VSS Investco in a number of tranches. Sharma must pay this again in 12 months or earlier than the IPO, and the rate of interest for this mortgage is 15%.

“Vijay Shekhar Sharma to lift exterior funding or promote his shares within the firm for reimbursement of the mortgage borrowed from the corporate,” the discover mentioned.

The opposite firm concerned is VSS Holdco. Paytm will subscribe to optionally convertible debentures of VSS Holdco value over $66 million, of 10 years tenure at an rate of interest of 15%. Paytm will find yourself owing 96% on this agency when the debentures are transformed into shares.

Paytm IPO Plans


For Paytm, this main pivot to a full-fledged monetary companies supplier, from being a digital pockets agency, will likely be important to its
ambitions for a public itemizing. Insurance coverage is likely one of the huge bets for Paytm because it appears to be like to scale its monetary companies portfolio. The corporate wants to shut the pending offers and safe all clearances earlier than the November preliminary public provide (IPO).

ET reported on June 8 that Paytm’s father or mother agency has informed its shareholders
it’s considering a mixture of recent issuance of shares together with a suggestion on the market for shareholders within the proposed IPO. This was the primary time the corporate formally spoke of its IPO plan.

ET final week
reported that Paytm clocked Rs 2,802 crore in consolidated income from operations for the FY21, a drop of 14% year-on-year. Its losses went right down to Rs 1,701 crore, from Rs 2,942 crore, a major drop of 42%. The audited monetary figures are but to be filed with the Registrar of Firms. ET had sourced the annual report independently.

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