Paytm IPO: Vijay Shekhar Sharma may not remain the promoter of the company he founded 21 years ago

• Paytm’s board of directors will take a call on the declassification proposal on July 12, 2021
• The fintech startup has made this move to meet all regulatory guidelines before submitting its IPO proposal
• Paytm plans to raise $3 billion in the upcoming IPO, of which $1.6 billion will be a fresh issue

Digital payments giant Paytm has moved a proposal to declassify Vijay Shekhar Sharma as the promoter of the company ahead of its $3 billion initial public offering (IPO). The company’s board of directors will consider the proposal at the extraordinary general meeting (EGM) to be held on 12 July, 2021.

According to the EGM notice from One97 Communications, the parent company of Paytm, accessed by Business Insider, this move in order to meet the regulatory, commercial and statutory requirements before hitting the public market.

According to Business Insider's previous report, the digital payments giant is planning to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) next month.

The 21-year old firm ⁠— which started as a payments company and then went to add a payments bank, trading platform, online retail and games to its business ⁠— is looking to raise $3 billion, at a valuation of $25-$30 billion. About half of this, $1.6 billion, will be new shares and the remaining will be raised by existing investors who will sell their shares in the IPO.

For this, the company has appointed Goldman Sachs and JP Morgan as the merchant bankers. It is also looking to appoint more merchant bankers and advisors such as Morgan Stanley and Citigroup Inc for the IPO. This could be the largest IPO in India, surpassing Coal India Ltd’s offering to raise ₹15,000 crore ($2 billion at current conversion rate) in 2010.

Paytm has raised about $3.2 billion in total, so far, from marquee investors like Berkshire Hathaway, Alibaba Group and more. The company was valued at $16 billion in its last funding round raised in November 2019. The $1 billion round had witnessed participation from T Rowe Price, Ant Group and Softbank Vision Fund.

The Noida-based company currently competes, in payments, with Google Pay and Walmart-owned PhonePe, which too has been considering to hit the public market by 2023. Besides this, even food delivery app Zomato and online auto classifieds CarTrade have filed the DRHP for their IPO with the SEBI. These companies have appointed their respective CEOs Deepinder Goyal (Zomato) and Vinay Sanghi (CarTrade) as the managing directors (MD) for the next five years.

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