India’s digital payment Paytm, formally called One97 Communications, is planning an Initial Public Offering (IPO) that could be the country’s largest stock market debut ever.
Paytm is asking employees to decide whether they want to sell shares in the planned IPO. It sent the “offer for sale” to its staff on Monday as it prepares to file for the IPO, according to documents reviewed by Bloomberg.
Paytm’s board has agreed on the the offering plans in principle and is completing a draft prospectus, which could be filed as soon as the first week of July, according to a person familiar with the matter.
One97 Communications “is proposing to undertake an initial public offering of its 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.
The company, whose investors include Berkshire Hathaway, SoftBank Group and Ant Group, is looking to raise about $3 billion at a valuation of around $25 to $30 billion, Bloomberg reported in May.
The public market debut will include a mix of new and existing shares to meet regulatory obligations in India. The country’s regulations require that 10 percent of shares are floated within two years and 25 percent within five years.
The offer for sale, or OFS, will allow employees to sell their shares as part of the IPO. Paytm’s board has given its preliminary backing, however formal approval cannot take place until the prospectus is completed.
If existing shareholders want to sell more in aggregate than allowed during the IPO, the ability to sell stock will be determined on a pro-rata basis, according to the documents.
Morgan Stanley is working with Paytm on the offering.
Employees can participate in the IPO by consenting to offer all or part of their equity shares, a decision that would need to be finalised 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.