One97 Communications, the parent company of popular digital payment platform Paytm on Friday (July 16) has filed its red herring draft prospectus (DRHP) as it gears up to go public. Vijay Shekhar Sharma led Paytm is going to raise INR 16,600 Cr via a public offering. The company in its filing mentioned that it will issue a fresh share worth INR 8,300 Cr and INR 8,300 Cr will be an offer for share, giving the existing investors to offload their shares.
The company plans to invest INR 4,300 Cr from the IPO proceeds to grow and strengthen its ecosystem through the acquisition and retention of consumers and merchants. It will also invest INR 2,000 Cr towards new business initiatives, acquisitions and strategic partnerships.
Apart from the board reshuffle, the company has also approved the addition of 242,904 stock options taking the total ESOP pool to 2,409,428 equity options.
As per the filings, the total number of outstanding ESOPs as of March 31, 2021, are 1,003,128 as compared to 877,070 on March 31, 2020. According to the DRHP, One97 Communications has two ESOP schemes: ESOP 2008 and ESOP 2019.
As of March 31, 2019, all ESOPs were granted under the former scheme and the vesting schedule was 10%, 20%, 30%, and 40% and 37,625,210 options were granted, 14,012,110 options were vested, and 10,722,810 options have been exercised as on the date of the DRHP. Post March 31, 2019, under ESOPs 2019, vesting schedule changed to 10%, 20%, 20%, 25%, and 25%. Under ESOP 2019 scheme the company granted an aggregate of 6,572,550 options of which 323,050 options have been vested and 130,270 options have been exercised.
Over the years startups have been offering ESOPs as a mode of wealth creation to their senior and older employees who have been with them from the company’s inception. ESOPs have also been a way for startup management to help them retain a person with a key role from moving away.
The company’s weighted average exercise price as of March 31, 2021, was INR 101.93 for 877,070 shares. It is important to note that the weighted average share price at the date of filing the report was fixed at INR 10,706.93, meaning average exercise prices were 100 times less than that of the weighted average share price.
In its DRHP, the company highlighted the number of shares held down by key managerial personnel along with the ESOPs held.
Among directors – Vijay Shekhar Sharma, Mark Schwartz of Goldman Sachs APAC, and Neeraj Arora, an additional director to the board hold 5,95,45,834 shares, 935,970 shares, and 75,000 shares respectively.
In terms of key managerial personnel, Madhur Deora who is the president and group CFO of Paytm holds 113,640 shares along with 974,750 shares of ESOPs. Second in line was the chief technology officer of Payments, Manmeet Singh Dhody, who holds 83,330 ESOPs. Vikas Garg, the chief financial officer of Paytm owns 468,420 equity shares. Sudhanshu Gupta, the chief operating officer of Paytm First Games has a total equity share of 174,750 and holds 13,790 of ESOPs. Bhavesh Gupta, chief executive officer of the Lending business owns a total of 138,890 shares.
Renu Shatti, the chief operating officer of Offline Payments as per the DRHP holds 278,790 shares. The Chief operating officer of Online Payments – Praveen Kumar Sharma – has 13,880 equity shares and 125,010 in ESOPs. The chief executive officer of Paytm Labs Inc., – Harinderpal Singh Takhar – holds 50,000 equity shares and a total of 1,256,560 in ESOPs