Paytm’s ex-director Ashok Kumar Saxena seeks to stall $2 billion IPO, firm calls it harassment

Paytm’s $2.2 billion IPO is going through 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 received 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 “criminal proceedings” in Paytm’s July IPO prospectus filed for regulatory approval.
Saxena denied harassment and mentioned Paytm had a excessive profile place that meant a personal particular person like him was not able to harass the corporate.
Saxena has approached the Securities and Exchange Board of India (SEBI) to stall the IPO, arguing traders might lose cash if his declare is proved proper, in accordance with a beforehand unreported grievance seen by Reuters.

SEBI didn’t reply to a request for remark.
Shriram Subramanian of shareholder advisory agency InGovern mentioned the tussle might spark regulatory inquiries and complicate or delay the approval of Paytm’s IPO that might worth it at as much as $25 billion.
“SEBI will need assurance that it will not impact the company and the public shareholders once listed,” Subramanian mentioned.
Irrespective of what the regulator decides, the dispute might change into a 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.
At the center of the dispute is a one-page doc signed between Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. Seen by Reuters, it says Saxena was to get a 55% fairness stake in Paytm’s mum or dad, One97 Communications, with Sharma proudly owning the remainder.
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 “did not materialize into any definitive agreement”.
The “Agreement Between Shareholders of One97” paper, 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 identify 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 present 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 mum or dad and prolonged the funds to it. But he “gradually seemed to lose interest”, Paytm says.
Around 2003-2004, Paytm argues it had transferred the shares to an Indian agency because it was “informed” that Saxena had reached a personal understanding with them. Saxena mentioned he by no means acquired any shares and there was no such understanding.
Asked why he had been silent for a number of years, he informed Reuters by phone from the United States that he had medical points in his household and had misplaced key paperwork which he solely discovered final summer season.
“The shares and money are one thing, but I also want to be recognized as the co-founder,” he mentioned. “It’s a question of posterity.”

The matter has reached a New Delhi court docket, the place Saxena in July urged a choose to press the town police to register a case on his grievance. The court docket order reveals police have been requested to reply and the case will probably be heard on Aug. 23.
A Delhi Police official mentioned on Thursday they might make the mandatory submissions to the court docket.