Twist In Paytm IPO: Ex Director Wants To Stop Rs 15,000 Crore IPO, Claims 55% Share In Paytm
Ashok Kumar Saxena is posing a threat to Paytm’s $2.2 billion IPO by asking Securities and Exchange Board of India (SEBI) to stop the public issue from taking place.
The 71-year-old Saxena is a former director of One97 Communications, Paytm’s parent company, having served between 2001-2004.
He had invested Rs 13 Lakh or $27,500 in the company’s early days when it was founded by Vijay Shekhar Sharma in 2000.
Saxena told SEBI that investors could lose money if his claim was proven right.
Why Speak Out Now And Not Earlier?
One97 Communications has dismissed Saxena’s claims that he owns a significant stake of 55% in the fintech company and was denied the shares.
It is being reported that Saxena reached out to the police back in June just as Paytm was preparing to list publicly, alleging that the company committed fraud against him.
Upon questions of why he did not speak up earlier, he claimed his family was undergoing medical issues and that he “misplaced key documents” he found only last summer.
Saxena’s Proof And Its Inadequacies
In terms of proof, he furnished a single-page document signed between Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001.
The document says that Saxena is entitled to a 55% equity stake in One97 Communications, with Sharma owning the rest.
However Saxena’s allegations don’t hold water since the company said that it functions as just a letter of intent which did not translate to a definitive agreement.
Paytm also hit back by saying that he is harassing the company and that he was never a co-founder to begin with.
Saxena Lost Board Member Seat Due To Lack Of Interest
But it did concede that he was among the initial directors and had contributed funds, but then slowly lost interest in the company.
Apparently he had given up his seat at the company by default due to his continued and unexplained absence from board meetings.
Thereby under (Section 283(1)(g) of the Companies Act, 1956) Saxena was no longer a member of the board.
Saxena denied the accusation of harassment by saying that Paytm was in a position high profile enough that no private individual could affect the company.
Will The IPO Go Ahead As Planned?
Now, regardless of whatever SEBI decides, the IPO plans will not go smoothly as planned as the regulator will require assurance that the IPO will not “impact the company and the public shareholders once listed.”
The IPO, which values Paytm at up to $25 billion, could give rise to regulatory inquiries which in turn would complicate or delay the approval of the public listing.