Swiss Re buying 23% stake.
Sharma and his two holding companies- VSS Holdco And VSS Network With this, Paytm Insurtech will have a stake of about 66%, according to
paytm red herring prospectus And people informed about the matter. The stake in the insurance arm of Paytm parent One97 Communications will come down to a little over 11%. Sources familiar with the matter told One97 Communications The approved proposal to give a loan of about $100 million to Sharma for the insurance deal has also been rejected. He said he would finance the deal on his own.
Sharma is expected to sell some of his shares and buy his stake in the insurance unit Paytm IPO (as part of the offer for sale component). It is also taking loans from banks to close the deal, which is subject to regulatory approval.
The 43-year-old, who is also the managing director and chief executive of Paytm, owns about 15% in the company. According to RHP, he will sell shares worth over Rs 402 crore in the IPO. With this, Sharma will have majority control in the insurance unit, which is valued at approximately $500-$550 million. Swiss RayInvestment for 23% stake.
last year, when it
Announces deal to acquire Raheja QBE, acquired entity QorQl (now renamed as Paytm Insuretech) and Sharma owned 51%, with the rest being held by One97 Communications.
“The loan was approved by One97 Communications before Paytm filed the draft Red Herring Prospectus (DRHP), but it has now been canceled as Sharma is arranging it himself. It will be available once regulatory approval is in place,” said a person privy to the matter.
Paytm has a call option on Sharma’s stake in the insurance business, which is seen as an important part of the company’s efforts to establish itself as a financial services conglomerate. “There is a thinking that Paytm Insurtech will be a unicorn (firm worth a billion dollars or more) in the near future as it grows the insurance business. It is already over $500 million,” said another person.
A Paytm spokesperson declined to comment on the matter.
Once the capital is infused, VSS Holdco and VSS Network will hold 54.48% in Paytm Insurtech, while Sharma will hold 11.49% and Paytm 11.03%.
According to the announcement made by Paytm on Wednesday, Swiss Re is making an upfront investment of Rs 397 crore. The rest of the money will come in installments based on certain business milestones.
On July 29, ET reported that Sharma
was looking for a joint venture for the general insurance business and that the insurance regulator was in favor of a more diversified ownership structure for a general insurance entity.
Even though Paytm’s parent firm is incorporated in India, it is treated as a foreign company by financial regulators, as most of its investors are foreign entities. It will remain the same even after listing.
Paytm has Insurance Broking License through a wholly owned subsidiary, Paytm Insurance Broking. Foreign direct investment (FDI) in insurance is limited to 74%, but foreign investors can own 100% of broking businesses.