In order to fund his payment bank, Vijay Shekhar Sharma, founder of Alibaba-backed Paytm, may dilute close to 1% of his stake in his holding company One97 Communications Ltd.
According to the central bank’s mandate, the Indian promoter has to own 51% stake in the payment bank, and the remaining can be owned by corporate entities. Vijay told ET that he aims to fund his 51% stake with debt or equity financing, and hopes to close the funding in the next two weeks.
He also plans to invest about $25 – $50 Mn in the bank, until it becomes profitable. “We will go to the market post-Diwali and tap current investors, banks as well as financial institutions for funding. The stake dilution will be less than 1%,” Vijay said. He is on a tour of the US and China, and is currently in China.
The bank will be named Paytm Payment Bank and according to Vijay, the initial estimates suggest that about $22.5 (INR 150 Cr.) will be required to set up the bank. “We are figuring out whether we require more funds. We have shortlisted a couple of names, but the board has to take a final call on it. The team should be in place by the end of this year,” Vijay added. Consultancy firms, EY and McKinsey have been assigned the responsibilities of preparing a blueprint for the bank and the company hopes to announce its CEO by next month.
The company has also announced today that it will commence hiring for its Payment Bank business. It will recruit about 3000 employees to roll out its Payment Bank services by the first quarter of next fiscal year.
Amit Sinha, VP of Paytm said, “Hiring for Paytm’s Payment Bank is a key focus area. We have planned to get on board about 3,000 people from banking and non-banking backgrounds like FMCG, Telecom, Consulting etc. We will draw on the expertise of a wide cross section of sectors.”