$50 Mn Secondary Share Sale Of Paytm To Take Place In The Coming Weeks

Some former and existing employees of Paytm will reportedly be selling shares worth over $50 Mn to new investors, including Discovery Capital. The development comes just a day after sources revealed that the secondary share sale will catapult Paytm’s valuation to $10 Bn, making it the most valuable Internet startup in India, after $12.6 Bn ecommerce giant Flipkart.

As per fresh reports, the share sale is expected to take place over the next few weeks.

With this, Canada-based VC firm Discovery Capital will come on board. The identities of the other investors, however, could not be ascertained.

Led by co-founder and CEO John McEwen, Discovery Capital is an investment firm that backs technology-based companies in the areas of information technology, communications, health and life sciences, environmental and energy technologies.

Till date, the firm claims to have facilitated the growth of over 300 early-stage tech companies by offering its expertise in strategic planning, financial strategies, corporate governance, management development and positioning for liquidity.

Growth Of Paytm Mirrored By Its Soaring Valuation

Paytm’s last valuation stood at $7 Bn, when it raised $1.4 Bn funding from Japan’s SoftBank in May 2017. Prior to that, within a span of a year, that number reached $6 Bn when three existing investors Reliance Capital Ltd, SVB (Saama Capital) and SAP Ventures, sold their combined stake of about 4.3% to Alibaba Group Holding Ltd and Ant Financial Services Group. Reliance Capital alone sold around 1% stake for $41.2 Mn in that secondary share sale.

The Anil Ambani-controlled Reliance Capital had bought this stake for $1.5 Mn (INR 10 Cr) in One97 Communications, the parent company of Paytm in 2010, ahead of its proposed IPO, which was later cancelled.

The spike in Paytm’s valuation has come with increasing investor interest over the years. This especially received a fillip post demonetisation in November 2016 which boosted digital transactions in the country.

Post-demonetisation, the company registered a 700% leap in overall traffic and 1000% increase in ‘add to cash’ transactions, as millions of consumers across India moved to use their Paytm wallets to transact offline.

A Look At Some Of Paytm’s Previous Share Sales

This isn’t the first time that Paytm employees have availed the Employee Stock Option Plan (ESOP). It is said that over the last two years, more than 100 employees have sold their shares in Paytm. In 2016, for instance, Paytm executives sold part of their ESOPs to the company’s external Board members like former Google and Uber executive Amit Singhal, WhatsApp’s Neeraj Arora, and Ruchi Sanghvi, etc.

Later, in March 2017, around 47 employees of Noida-based Paytm sold shares in parent company One97 Communications worth about $15.3 Mn (INR 100 Cr) to both internal and external buyers.

In May last year, Sixth Sense Ventures founder and CEO Nikhil Vora raked in about $23.4 Mn (INR 150 Cr) by selling his stake in One97 Communications, Paytm‘s parent company. The stake was sold to Chinese ecommerce giant Alibaba Group Holdings.

In the same month, it was reported that venture capital and private equity firm SAIF Partners was looking to make $300 Mn-$400 Mn returns on its Paytm bet, by partially selling its stake to Softbank.

Earlier this month, it was reported that Paytm is aiming to achieve $14 Bn GMV during the ongoing fiscal year. As part of the announcement, the digital payment company’s founder Vijay Shekhar Sharma, also revealed that Paytm made 255 Mn transactions in December 2017.

In November last year, Paytm claimed that it was witnessing 7 Mn transactions worth $18.78 Mn (INR 120 Cr) a day, this also helped it crossing $5 Bn GMV sales, four months ahead of its target.

Through the $50 Mn secondary share sale, Paytm is likely looking to provide an exit to some of its existing investors, while also bringing new investors like Discovery Capital on board. Whether the digital payments giant manages to overtake Flipkart to become the most valuable Indian startup remains to be seen.

(The development was reported by ET)