One97 Communications, the parent company of Digital payments Paytm is bringing India’s biggest initial public offering (IPO). The Digital payments company has got approval for its IPO from market regulator the Securities and Exchange Board of India (SEBI).
Paytm had filed its draft prospectus in July this year, proposing to sell new shares worth Rs 8,300 crore, and existing shares worth as much. It is expected that the launch of the public offering will take place sometime next month, around Diwali.
Paytm founder, managing director and chief executive Vijay Shekhar Sharma and Alibaba group firms will dilute some of their stake in the proposed offer-for-sale. Several Indian companies operating in the consumer internet space have gone public, including food-tech firm Zomato and online travel agencies like MakeMyTrip.com and yatra.com.
The idea behind bringing IPO
The company plans to raise Rs 8,300 crore through fresh issue of equity shares and another Rs 8,300 crore through the offer-for-sale route.
Paytm says it plans to use Rs 4,300 crore of the fresh issue to expand its existing business lines and acquire new merchants and customers.
Paytm plans to earmark Rs 2,000 crore for business initiatives, acquisitions and strategic partnerships and up to 25% for general corporate purposes.
The company is expecting a valuation of USD 20-USD 22 billion and at last fundraise it was valued at USD 16 billion.
The company has been in discussions with some foreign investors, including Singapore’s GIC and ADIA to participate in the IPO.
The company posted a consolidated loss of Rs 1,701 crore on revenue of Rs 2,802.4 crore in FY21.
It posted a loss of Rs 2,942.4 crore on revenue of Rs 3,280.8 crore in FY20, according to its draft red herring prospectus (DRHP).
According to Paytm’s DRHP, 75% of its public issue will be earmarked for qualified institutional buyers (QIBs).
15% is for non-institutional investors and the balance is for retail investors. Up to 60% of the QIB portion may be allotted to anchor investors.
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