NEW DELHI:
Paytm, which is allowing employees to become shareholders before its upcoming mega public offering, will facilitate liquidity to pay share price and employee stock ownership plan (
ESOP
) tax through loans of up to Rs 100 crore.
The Noida-headquartered
digital
payments and financial services giant is heading for its $2.2-billion IPO, which is the biggest such offer in the Indian stock market history and has filed a draft prospectus with market regulator
Sebi
for the same.
ESOP, seen as a strategy to attract and retain talent, is an employee benefit plan that allows employees to own shares in the company.
For an employee, turning ESOPs into shares comes with an exercise price and tax payments. “Lot of employees are facing this issue as most don’t have the reserves to pay for the transactions. We are trying to solve this and are in talks with a few lenders,” said a senior executive.
SoftBank-backed Paytm will help employees get liquidity by facilitating loans from lending partners, making it easier for employees to manage liquidity to become a shareholder, he said. Employees who hold ESOPs will be able to convert them into shares and add them to their demat account.
The company, which has given out the largest ESOPs as a startup in the country amounting to Rs 6.1-crore shares, will bear the full interest cost of all these loans for six months. The digital payments major’s move comes at a time when valuations of tech startups in India are at an all-time high, giving them the opportunity to provide buyback windows to employees who want to encash their stock options.