Capitalising on the boom in the stock market and rising digital transactions, One97 Communications, the parent of Paytm, has filed the draft red herring prospectus to raise ₹16,600 crore making it the largest Initial Public Offering in India. So far, the biggest IPO in India was Coal India's ₹15,200-crore issue in 2010.
The IPO is expected towards November-end. Paytm is looking for a valuation of about $20 billion, according to sources
The prospectus gives the first detailed look into Paytm’s financials and what it plans to do with the money raised through the IPO. According to the DRHP, it will use ₹4,300 crore for “growing and strengthening our Paytm ecosystem, including through the acquisition of consumers and merchants and providing them with greater access to technology and financial services”. Another ₹2,000 crore is to to be used for investing in new business initiatives, acquisitions and strategic partnerships. The IPO comprises a fresh issue of equity shares for ₹8,300 crore and an offer for sale by existing shareholders for ₹8,300 crore. The company also retains the option to undertake a pre-IPO placement for ₹2,000 crore. If the pre-IPO placement is achieved, the fresh issue size will be reduced to that extent.
₹16,600-cr Paytm IPO gets shareholders nodThe digital financial services firm held its extraordinary general meeting
As part of the OFS, existing shareholders, including Paytm founder and CEO Vijay Shekhar Sharma, Ant Financial, Alibaba group, Elevation Capital, Saif Partners, and BH International Holdings will sell shares. The DRHP does not disclose the share price or the stake to be diluted by any of the shareholders. Paytm says it is a professionally managed company and does not have an identifiable promoter. Ant Financial’s subsidiary, Antfin (Netherlands) Holding BV, is Paytm’s largest shareholder with 29.6 per cent stake followed by SVF India Holdings (Cayman) holding 18.3 per cent. Vijay Shekhar Sharma is the fourth-largest shareholder with 9.6 per cent stake.
Paytm Money offers a new “pre-open IPO applications” feature in its platformUsers can place IPO orders 24x7 when the “pre-IPO” application is enabled
As much as 75 per cent of the net offer is reserved for QIBs (qualified institutional buyers). Fifteen per cent of the net offer will be for non-institutional bidders and 10 per cent for the retail segment. Shares will also be allocated to eligible employees under th portion reserved for them.
Paytm made a loss of ₹1,701 crore for the year ended March 31, 2021, though they were down 42.2 per cent from ₹ 2,942 crore in 2019-20. In 2020-21, its total income fell 10 per cent to ₹3,186 crore from ₹3,540.7 crore in 2019-20.
Anup Jain, Managing Partner, Orios Venture Partners, said while the operations are indeed loss-making and will remain so for some time, Paytm is banking on the high growth in the mobile payments space. “Paytm's IPO is centred on its dominant market share and mindspace with consumers and merchants in mobile-led payments. The pandemic has had a positive impact on mobile payments no doubt but retail took a hit in many sectors. So the net impact perhaps was more of penetration versus value enhancement per consumer.”