One 97 Communications Limited (OCL), which owns the brand Paytm, on Tuesday said it will undertake a buyback of up to Rs 850 crore (excluding buyback taxes and other transaction costs) at a maximum price of Rs 810 per share.

The buyback is at a premium of 50 per cent of the company’s shares which closed at Rs 539.50, a gain of 2.16 per cent, on the BSE on Tuesday. However, the buyback price is at a discount of 62 per cent from the IPO price of Rs 2,150 per share.

The board, which met on Tuesday, has decided to opt for the open market route through stock exchanges method, which is to be completed within a maximum period of 6 months.

“Paytm reiterates that proceeds from the IPO are not being directed towards the share repurchase plan,” the company said in an exchange filing. It said all directors present voted unanimously in favour of the proposal, including all independent directors.

The company’s directors and key management personnel will not sell any shares during the buyback period, it said.

“While Paytm will continue disciplined investments to drive long-term value creation, across technology, sales, marketing, and other areas, the Paytm board has determined that there is surplus liquidity that can be productively applied to a buyback of shares,” it said.

“This decision has been taken after a detailed review of projected investment requirements to drive long-term value creation,” Paytm said. “Paytm board believes that this buyback is a sign of confidence that the company is on a clear path to deliver cash flow profitability, and this buyback will not have any impact on its growth plans in the near future or on its profitability plans,” it said.

According to Paytm, at the maximum buyback price and the maximum buyback size, the indicative maximum number of shares bought back would be 10,493,827 shares, which represent 1.62 per cent of the paid-up share capital of the company as of March 31, 2022. “If the shares are bought back at a price below the maximum buyback price, the actual number of shares bought back could exceed the maximum buyback shares, but will always be subject to the maximum buyback size,” it said.

The company will utilise at least 50 per cent of the amount earmarked as the maximum buyback size — Rs. 425 crore — for the buyback (minimum buyback size). Based on the minimum buyback size and maximum buyback price, the company would purchase a minimum of 5,246,913 shares. The board has constituted a buyback committee to oversee and implement the buyback.