Also in this letter:
🚨 NCB asks WazirX for details of alleged drug dealer
💸 ShareChat plans its first Esop buyback
P.S. Tomorrow in ETtech Unwrapped, our weekly newsletter: The weirdest cryptocurrencies of all time, featuring Coinye West. Don’t miss it!
Paytm aims to raise $1.6 billion from new shares in its upcoming IPO
GIF Credit: Giphy
Noida-based digital payments major Paytm is inching closer towards its much-awaited public offering.
Driving the news: Paytm’s parent firm One97 Communications intends to issue fresh shares worth Rs 12,000 crore ($1.6 billion) ahead of its upcoming IPO, the company said in a note to shareholders ahead of its upcoming extraordinary general meeting (EGM) in July.
This is the first time the firm has indicated how much it intends to raise, albeit partially, since it hasn’t mentioned share sales by existing shareholders. Earlier this month, we reported that Paytm was contemplating a mix of fresh issuance and offer for sale (OFS) for shareholders in its proposed public issue.
IPO timeline: Paytm aims to go public by November and is expected to file its draft red herring prospectus with markets regulator Sebi by next month. Read our recent deep dive into the payment giant’s IPO plan.
Declassification as promoter: In the note to shareholders, founder Vijay Shekhar Sharma has also sought declassification as promoter to comply with Sebi’s rules. This could be a step towards Paytm classifying itself as a ‘professionally managed’ company prior to the listing, a source told us.
- To list as promoter-led companies, Sebi requires promoters to have at least 20% of the post issue capital with a three year lock-in period. Sharma currently holds 9,051,624 equity shares of the company, amounting to 14.61% of the total paid-up equity share capital of the company on a fully diluted basis, according to the company’s note.
Financials: One97 Communications saw its consolidated revenue from operations fall 14% to Rs 2,802 crore in FY21. Losses however narrowed to Rs 1,701 crore for the fiscal, from Rs 2,942 crore loss in FY20. The company told shareholders in a recent letter that it intends to break even by the end of FY22.
Twitter India representatives deposed on Friday before a parliamentary committee led by Congress leader Shashi Tharoor on issues related to the misuse of its platform and protection of citizens’ rights.
On the agenda: The parliamentary panel had recently summoned Twitter officials to hear their views about various steps the company is taking to prevent of its platform, with “special emphasis on women’s security in the digital space”.
UP Police summon India MD: Meanwhile, Twitter India managing director Manish Maheshwari has been summoned by Uttar Pradesh Police to appear before a Ghaziabad police station, a day after the police filed an FIR against the company and seven others in connection with a viral video of an attack on an elderly person.
What’s the problem? The Ghaziabad police said Twitter failed to flag or delete the posts related to the case even after the police issued a clarification negating the alleged communal nature of the crime.
These developments come amid a standoff between the government and Twitter over India’s new IT rules, which came into force last month. Earlier this week, Union minister for electronics and information technology Ravi Shankar Prasad said that Twitter has “deliberately chosen the path of non-compliance” with respect to these rules.
Tweet of the day
Grofers cofounder to step down
Saurabh Kumar, who cofounded Grofers with Albinder Dhindsa eight years ago, is leaving the online grocery platform.
Kumar will no longer be involved in the day-to-day responsibilities of the Gurugram-based firm but will continue to be a board member and shareholder, Dhindsa said.
This move comes as IPO-bound Zomato is close to investing $100 million in the online grocery store, as we reported on May 7. The investment is likely part of a larger financing round and may value Grofers at around $1 billion, sources had previously told ET. Kumar currently owns a 3.5% stake in the firm.
Growing competition: While grocery is a low-margin business, demand has spiked amid the second wave of the pandemic in India. The Zomato deal may help Grofers scale up its business in a highly competitive sector with large players such as Amazon, BigBasket, Flipkart and Reliance JioMart. Last month, Tata Digital announced its purchase of 64% of BigBasket in one of the biggest M&A deals in India’s digital sector.
What’s next? Kumar’s next move is not clear at the moment, although it seems like he will be starting up again. He told ET that he is looking forward to building more fun and exciting things ahead. “Some things are cooking. We will have to wait for it to take shape,” he said.
Other prominent startup founder exits: IPO-bound Delhivery also saw the exit of two of its cofounders — Bhavesh Manglani and Mohit Tandon — earlier this year, while Swiggy cofounder Rahul Jaimini quit last May to join career accelerator startup Pesto Tech. Zomato cofounder Pankaj Chaddah left the firm in 2018 to start a mental wellness venture Mindhouse.
ShareChat’s first Esop buyback
Mohalla Tech, the parent company of regional language social media platform ShareChat and short video app Moj, said it will buy back employee stocks worth $19.1 million in its first-ever Esop buyback.
- In April, ShareChat had raised $502 million in a round led by US investment firm Tiger Global at a valuation of $2.1 billion, thereby entering India’s startup unicorn club.
Details: About 200 existing and former employees with vested options will be eligible to participate in the buyback. They can sell upto 100% of their vested shares at the current valuation of $2.1 billion.
Policy change: ShareChat has revised its Esop exercise price from Rs 1,551 to one rupee and tweaked its vesting policy. As per the new policy, 25% of Esops will vest in the first year, followed by 8.25% every quarter. Previously, the company had an annual vesting schedule.
With this, ShareChat joins a clutch of Indian startups including Zerodha, PhonePe, Udaan, Cred, Paytm, Acko, and Licious have done Esop buybacks, leading to wealth creation at a time when the sector has seen a significant uptick due to the Covid-19 pandemic.
Here’s a quick look at the top funding deals this week
Narcotics Control Bureau asks WazirX for details of alleged drug dealer
The Mumbai wing of the Narcotics Control Bureau (NCB) recently sought details from cryptocurrency exchange WazirX about an alleged drug dealer who, according to the agency, used its platform to deal in contraband. On Tuesday, the NCB arrested Makarand Pardeep Adivirkar, aka Cryptoking, in Mumbai for allegedly using bitcoin to purchase the drug LSD on the dark web in November 2020.
- WazirX, which is India’s largest cryptocurrency exchange by volume, however denied that the alleged dealer used its platform and said it had communicated this to the authorities on June 12, a day after it received the enquiry from the NCB.
ED notice: Last week, the Enforcement Directorate (ED) had asked WazirX to explain transactions worth Rs 2,790.74 crore under Foreign Exchange Management Act, 1999, (FEMA). The exchange claimed that as of Friday it had not received any summons from the ED but promised full co-operation when it does get the formal communication. Do read our explainer on this case.