look news india
A large part of the funds of the country’s biggest IPO launched in the year 2021 by One97 Communications Ltd, the parent company of digital payment and fintech giant Paytm, has not been spent even after almost five years. The company is left with an unused amount of ₹1,686 crore from the money raised from the IPO. Now, in the notice issued for the upcoming 26th Annual General Meeting (AGM), the company has sought approval from the shareholders on a special resolution to widen the scope of use of this fund and extend its deadline till March 2029.
Out of ₹2,000 crore, only ₹314 crore was spent
When Paytm launched its mega IPO in November 2021, it had received a total of net funding of ₹8,119.4 crore. Of this amount, ₹2,000 crore was specifically earmarked for ‘new business initiatives, acquisitions and strategic partnerships’.
According to the company’s official filing, only ₹314 crore has been utilized from this item till July, while an amount of ₹1,686 crore is still reserved with the company unutilized. Of the total IPO funds, ₹6,433.4 crore has been utilized so far.
Focus on core business and profitability became the reason for not spending funds.
The company says that after the IPO, instead of making indiscriminate acquisitions or burning huge cash, it focused on strengthening its core business, connecting customers and merchants and developing technology infrastructure in lending, insurance and wealth management.
On the basis of these investments made organically, the company strengthened its financial performance. Due to this operational discipline and careful approach, a huge amount of funds was saved.
What relaxation has the company asked for? Know the new proposal
Paytm now seeks approval from shareholders to flexibly deploy the remaining ₹1,686 crore across core business priorities rather than restricting it only to external acquisitions:
-
Flexible Fund Allocation: The company will be able to deploy the remaining funds as per requirement in payment technology, merchant network expansion, financial services and strategic opportunities without any specific limits.
-
Additional time of two years: The company has requested to extend the deadline for spending the funds by another two years till March 31, 2029, so that shareholder value can be maximized at favorable market opportunities.
-
No new objectives: The company has clarified that no new objectives are being added apart from the original objectives mentioned in the IPO prospectus, but the exemption is being sought for better use of capital among the existing priorities.
Shareholders will vote in AGM on 15th September
To pass this proposal, the company will require a special majority (Special Resolution) from the shareholders in the Annual General Meeting (AGM) to be held on September 15.
Market analysts believe that this huge amount of unused cash reflects the company’s strong financial position and discipline in capital management. If this approval is received from shareholders, Paytm will get ample liquidity from internal accruals without raising fresh debt or equity from the market to aggressively expand its lending and payments ecosystem.