Ahead of IPO, Paytm to extend Rs 743 funding to its founder’s two company

Paytm plans to extend Rs 743 crore funding to two companies owned by its founder Vijay Shekhar Sharma ahead of its $3 billion initial share sale

One97 Communications Ltd., which owns Paytm, issued a notice to its shareholders, that it proposes to lend money to two companies owned by Vijay Shekhar Sharma ahead of its IPO of $3 billion. This proposal will be put to voting at the company’s annual meeting on June 30, 2021. It was sent to the company’s board meeting on May 28, 2021.

According to the proposal, Paytm will buy Rs 491.93 crore worth of optionally convertible debentures to be sold by VSS (Vijay Shekhar Sharma) Holdings Pvt. Ltd, a company owned by Sharma. The debentures will mature in 10 years and bear an annual interest of 15%. The funding will be done in one or more tranches.

Once the debentures get converted into shares, Paytm will own 96% in VSS Holdings. This conversion can be done anytime. The company will utilize these funds for its primary business activities like financial intermediation, except insurance and pension funding.

Apart from this, another proposal will be put to vote. This is of a loan of Rs 251 crore to VSS Investco Pvt. Ltd. However, as per the note, VSS Investco will have to repay the amount within 12 months or before Paytm’s IPO. An official statement from Paytm is, Sharma will be raising external funding or selling his shares in the company to repay the loan.

VSS Holdco and VSS Investco both were incorporated in January 2020 and have been engaged in similar businesses.

 

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