Paytm’s Initial Public Offering (IPO) is set to launch, and before its public debut, many of its top employees are exercising converting their employee stock ownership plan (ESOP) grants into the company’s shares. Rs 600 crore is the estimated worth of the company, says media reports.
One97 Communications, Paytm’s parent company is pitching to five lenders to help staff exercise their employee stock options (ESOPs) and make necessary tax payments, reported Mint.
“Paytm (One97) is in talks with financing institutions such as IIFL, ICICI Bank and Edelweiss Capital to help its employees convert their employee stock ownership plans into shares and provide them loans to pay for exercise price and tax payments. These loans are expected to be of the duration of 12 months,” a source told the publication.
The business is expected to accelerate a loan of Rs 100 crore, which would benefit 300-500 employees with vested options. According to the article, the loans would most likely be for a year.
The move has come after the fintech company has received several requests from its employees to introduce the conversion option. Furthermore, such funding reduces the tax burden on employees during the conversion process.
The law says that an employee shall be taxed for the conversion of Esop grants into the company’s shares. The difference between current share values and those at the time of Esop is used to compute this tax. Employees are also subject to capital gains tax if they want to sell their stock. As per the report by Economic Times, Paytm is selling its shares for Rs 18,000 and issuing Esop for 12 years. In addition, top Paytm personnel will lead roughly 80% of the Esop conversion.