Ant deal revives question on Sharma’s position at Paytm

livemint.com:

Paytm founder-CEO Vijay Shekhar Sharma’s decision to acquire an additional 10.3% in the company from Ant Financial has reignited the debate around his actual holding in the company and if, as a public shareholder, he has control of the company and enjoys the perks of being a promoter without actually being classified as one. Paytm parent One97 Communications says Sharma owns 19.42% of the country’s largest payments company.

But Institutional Investor Advisory Services (IiAS), a proxy advisory firm, contests the claim, saying Sharma owns 24.3%. On Monday, Jack Ma-founded Ant Group swapped 43.5% of its equity in Paytm for convertible debt, as Sharma got an additional 10.3% stake, bringing his total ownership to 19.42%, according to a company press release.

“A further 4.88% equity is held by the Sharma Family Trust, in the name of Axis Trustee Services," IiAS, the Mumbai-headquartered proxy advisory firm, said in a note on Wednesday. “We continue to believe that Vijay Shekhar Sharma will have influence over how the 4.88% equity held by the trust will vote on shareholder resolutions, giving him effective control of 24.3% of the voting rights." The issue of 19.42% as against 24.3% becomes important at Paytm, which does not have an identifiable promoter because this ownership is a shade less than 26%, crossing which would force a shareholder to make an open offer to buy another 26% shares from other shareholders in the company.

“Paytm remains a professionally managed company with no identifiable promoter. Vijay Shekhar Sharma currently holds 9.12%, and after the announced transaction is completed, he will own 19.42%," said a spokesperson for the company.