New Delhi: Paytm’s $2.2 billion IPO is dealing with an uncommon hurdle – a 71-year-old former director has urged India’s markets regulator to stall the providing, alleging he’s a co-founder who invested $27,500 20 years in the past however by no means bought shares.
In authorized paperwork seen by Reuters, Paytm says the declare by Ashok Kumar Saxena and allegations of fraud in a police grievance in New Delhi are mischievous makes an attempt to harass the agency. The dispute although is cited below “prison proceedings” in Paytm’s July IPO prospectus filed for regulatory approval.
Saxena denied harassment and stated Paytm had an excessive-profile place that meant a non-public particular person like him was not ready to harass the corporate.
Saxena has approached the Securities and Trade Board of India (SEBI) to stall the IPO, arguing traders may lose cash if his declare is proved proper, in response to a beforehand unreported grievance seen by Reuters.
SEBI didn’t reply to a request for remark.
Shriram Subramanian of shareholder advisory agency InGovern stated the tussle may spark regulatory inquiries and complicate or delay the approval of Paytm’s IPO that might be worth it at as much as $25 billion.
“SEBI will want assurance that it’s going to not affect the corporate and the general public shareholders as soon as listed,” Subramanian stated.
Regardless of what the regulator decides, the dispute may grow to be an authorized headache forward of the much-awaited IPO of Paytm, which counts China’s Alibaba and Japan’s SoftBank amongst its traders. Neither responded to a request for remark.
On the coronary heart of the dispute is a one-page doc signed between Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. As seen by Reuters, it says Saxena was to get a 55% fairness stake in Paytm’s father or mother, One97 Communications, with Sharma proudly owning the remaining.
Paytm declined to remark. Sharma didn’t reply to a request for remark.
POLICE SUBMISSION
Reuters reviewed a June 29 response the corporate gave to the Delhi Police, the place it says the doc was “merely a letter of intent” which “didn’t materialize into any definitive settlement”.
The “Settlement Between Shareholders of One97” paper, which was additionally reproduced by Paytm earlier than police and signed by the 2 males, reveals Paytm’s police submission which isn’t public.
Paytm’s police submitting denies Saxena was a co-founder.
Paytm’s rise has been phenomenal, with its app a family title in India for digital funds. The face of the corporate has been flamboyant CEO Sharma, 43, whose app rivals these run by Google and Walmart.
Paytm’s incorporation paperwork within the authorities database presents Saxena as a director of the corporate between 2000 and 2004. In its police response, Paytm agrees he was among the many first administrators of the corporate’s father or mother and prolonged the funds to it. However he “step by step appeared to lose curiosity”, Paytm says.
Round 2003-2004, Paytm argues it had transferred the shares to an Indian agency because it was “knowledgeable” that Saxena had reached a non-public understanding with them. Saxena stated he by no means obtained any shares and there was no such understanding.
Requested why he had been silent for a number of years, he informed Reuters by phone from the USA that he had medical points in his household and had misplaced key paperwork which he solely discovered final summer season.
“The shares and cash are one factor, however, I additionally wish to be acknowledged because the co-founder,” he stated. “It is a query of posterity.”
The matter has reached a New Delhi court docket, the place Saxena in July urged a decision to press town police to register a case on his grievance. The court docket order reveals police have been requested to reply and the case will likely be heard on Aug. 23.
A Delhi Police official stated on Thursday they might make the required submissions to the court docket.