Updated: June 9, 2021 10:28:13 am
IPO-bound One97 Communications Ltd, parent company of payments firm Paytm, will seek shareholders’ nod later this month to extend a loan up to Rs 743 crore to two holding companies owned by founder and CEO Vijay Shekhar Sharma. As per sources, the amount raised is likely to be used for investment in Paytm’s insurance business.
According to a notice of the company’s annual general meeting to be held on June 30, in lieu of the investment, One97 Communications will be issued optionally convertible debentures by VSS Holdings Pvt Ltd worth up to Rs 491.93 crore, and inter-corporate deposits (ICDs) worth up to Rs 250.79 crore by VSS Investco Pvt Ltd. The ICDs can be issued in one or more tranches. It is learnt that the Alibaba-backed company’s board of directors has cleared the decision. Paytm did not respond to queries sent by The Indian Express.
Last year, a wholly-owned subsidiary of the company, Paytm Insurance Broking Pvt Ltd, received its license to sell life and non-life insurance from Irdai.
The parent company also recently approved a Rs 90-crore investment in Paytm Insurance Broking Pvt Ltd, even as One97 Communications itself saw its business shrink as a result of Covid.
For FY21, One97 Communications saw its revenue from operations fall 14.5 per cent over the previous year to Rs 2,802 crore, even as its net loss narrowed to Rs 1,701 crore, compared to Rs 2,942 crore in FY20. One97 Communications has also proposed to retain Sharma’s remuneration at Rs 4 crore per annum for the ongoing fiscal.
In a separate letter to its shareholders Monday, the company informed them of its plan to undertake an IPO. It has invited applications from its shareholders that are looking to dilute their stakes in the IPO. “Whilst the board of directors have provided an in-principle approval for the IPO, the size of the offer for sale component is subject to final approval of the board of directors,” it said.
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