PB Fintech shares slump 11.5% after CEO divests holding

Dahiya sells 3.78 mn shares; move aimed at raising funds for paying tax on ESOPS: Firm

Shares of PB Fintech — the parent of Policy Bazaar and Paisa Bazaar portals — dropped as much as 15 per cent on Tuesday after chairman and chief executive officer Yashish Dahiya offloaded 3.78 million shares.

The stock ended at ~582.8 apiece, down 11.5 per cent—the second-biggest single-day fall since its listing in November.

PB Fintech’s shares touched an intra-day low of ~556 on the NSE, where shares worth ~638 crore changed hands. A stock exchange disclosure showed Dahiya sold 3.78 million shares (0.84 per cent stake) at ~610.2 apiece for a total of ~230 crore.

Market players said the founder’s decision to sell a large quantity of shares at a time when PB Fintech’s stock has more than halved from highs hurt investor sentiment.

The company said the share sale aimed to generate funds to pay for taxes on employee stock option plans (ESOP). “As the ESOPS are subject to payment of taxes on exercise in addition to the payment of capital gain tax on the sale of shares, the proceeds from the sale of the 3,769,471 shares are proposed to be used to make the payment of current and future taxes,” PB Fintech said.

Shares of PB Fintech have declined nearly 40 per cent this year. In comparison, the Sensex is down 7 per cent.

The company’s assurance that Dahiya’s stake in PB Fintech will increase over time because of vesting of ESOPS did little to stave off a sell-off.

“The aggregate shareholding of Yashish Dahiya as on [March 31] was 19,008,349 (4.23 per cent) and post the exercise of 5,509,601 ESOPS during May his aggregate shareholding increased to 24,517,950 (5.45 per cent)… Further, aggregate shareholding of Yashish Dahiya on account of exercise of 7,196,604 stock options which will get vested and exercisable over a period of 5 years commencing from the grant date i.e. October 5, 2021, will increase to 28,092,982 (5.98 per cent) on a fully diluted basis post the proposed sale,” PB

Fintech said in a stock exchange disclosure.

It is a common practice among India Inc leaders to divest a portion of their holdings to pay for more ESOPS.

PB Fintech’s ~5,625-crore initial public offering (IPO) in November was well received by investors as it saw 16 times oversubscription.

The IPO comprised ~3,750 crore of fresh fund-raise and ~1,875 crore of secondary share sale. Shares were issued at ~980 in the IPO. Within days of listing, the shares climbed to ~1,470 apiece.

However, the US Federal Reserve’s decision to unwind its post-pandemic stimulus measures has taken the wind off the sails of start-up shares—many of which will only generate profits sometime in the future.

With sentiment towards startup stocks souring, their corporate actions are generating intense investor scrutiny, say market players.

In recent months, Zomato, Nykaa, and One97 Communications have faced shareholder dissent over resolutions pertaining to ESOP issuances.