Paytm IPO: Chinese nationals exit board

MUMBAI: Ahead of Paytm’s initial public offering (IPO), all Chinese nationals representing key investor Ant Group have stepped down from the board. While Ant Group continues to have a representative on board, the employee is a US national based in Florida.
According to filings with the registrar of companies, Jing Xiandong of Alipay and Guoming Cheng of Ant Financial, both Chinese nationals, have ceased to be directors of the company. Additionally, Micheal Yuen Jen Yao, a US national, and Ting Hong Kenny Ho, a Chinese national of Alibaba based in Hong Kong, also ceased to be directors.
The new entrants to the board include Douglas Feagin, a senior vice-president of Ant Group and a US national. Feagin was a former banker at Goldman Sachs. The other two appointees are Ashit Lilani and Vikas Agnihotri. Lilani represents Saama Capital, and Agnihotri is from Soft-Bank.
The changes in the board composition come ahead of the company’s proposed $2.3-billion IPO, which values it at $24-25 billion. The public offering will be a combination of sales by existing investors and primary issue of shares. Ant Group is a significant shareholder in One97 Communications (Paytm’s parent company) with a stake of around 30%. The IPO is expected to bring down its shareholding to below 25%.
Last year, the government restricted Chinese investment in Indian companies. This was done due to fears that Chinese investors would take advantage of the volatility arising out of the pandemic and hike stakes in domestic firms. Given that the IPO will be the largest in the country, the company will have to attract deep-pocketed investors. These will include domestic institutions in addition to foreign investors.
The dilution by strategic investors and broad-basing the board of directors is seen as an attempt to assuage those who might have concerns over investing in a company where China’s Ant Group had claimed to have significant influence.
The changes were considered in a recent board meeting. The directors also approved the allotment of 5.4 lakh equity shares (post-split of Re-1 face value) to employees and some ex-employees upon exercise of employee stock options by them.
According to the company filing, it has 39 subsidiaries including Paytm Entertainment, Paytm Money and Paytm Financial Services. The company has registered subsidiaries with Paytm brand in many countries. Paytm Payments Bank is not a subsidiary of One97 Communications, which holds only 39% in the bank.

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