IPO-bound Paytm to expand ESOP pool, calls EGM on September 2

Vijay Shekhar Sharma, Chief Executive Officer of Paytm.

IPO-bound Paytm is expanding the employee stock ownership plan (ESOP) pool with 3.7 crore shares through an extraordinary general meeting on September 2, taking the total pool to 6.10 crore.

The company sent this information in a letter to its shareholders.

Moneycontrol has seen a copy of the letter.

In the letter, the company said it plans to increase the existing ESOP pool from 24,094,280 equity options to 61,094,280 equity options at a face value of Rs 1 each. This will help the company reward and recognise employees who have contributed to the growth of the company.

Paytm is headed for India’s largest market debut at Rs 16,600 crore.

This will also be India's biggest public issue so far, a record that was previously held by Coal India, which raised Rs 15,000 crore over a decade ago, underscoring the appetite for new-age internet companies among institutional investors.

The platform offers payment instruments such as wallet, sub wallets and prepaid card, savings account, current account, debit cards, FASTag, National Common Mobility Card, and UPI, which are issued or opened by Paytm Payments Bank, and Paytm Postpaid (BNPL), credit cards, amongst others, issued by its financial partners.

It filed its draft prospectus last month, according to which in consumer to merchant transactions it has a 40% market share. On the other hand, the company claims to be having 65-70% market share in the consumer to merchant wallet transactions.

Ahead of the IPO, the company is also seeking shareholder approval for the appointment of Neeraj Arora, Douglas Feagin, Ash Lilani to the board along with remuneration of non-executive directors.

It is also approving the remuneration for the directors. While Mark Schwartz will be paid $250,000 ( 1.85 crore), Pallavi Shardul Shroff will be paid $250,000 (1.85 crore).

Ashit Ranjit Lilani and Neeraj Arora will be paid $200,000 (1.48 crore) each.

Paytm had clocked revenue of Rs 3,186 crore for FY 20-21 vs Rs 3,540 crore in the previous year. It narrowed losses to Rs 1,701 crore during the same period from Rs 2,942 crore in the previous year.

Paytm is currently India's second most-valuable internet company, last valued at $16 billion when it raised a billion dollars in November 2019 led by T Rowe Price, Discovery Capital and D1 Capital.

If Paytm goes public at the $25-$30 billion valuation it is targeting, it would surpass ed-tech firm Byju's $16.5 billion, currently the country's most valuable private internet company. WalMart-owned Flipkart; however, recently saw its valuation jump to $37 billion when it raised $3 billion.

The total merchant base of the company has grown from 11.2 million as of March 31,2019 to 21.1 million as of March 31, 2021.