Paytm IPO: Key things to know about issue worth Rs 18,300 crore

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Paytm IPO: Key things to know about issue worth Rs 18,300 crore
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Paytm, the digital payments company has come knocking on the doors of primary markets with the biggest offer to date in terms of size. Its initial public offer (IPO) is worth a massive $2.4 billion or Rs 18,300 crore. The new total IPO size includes a fresh issue of Rs 8,300 crore and an offer for sale (OFS) worth Rs 10,000 crore.

The public issue of its parent firm One97 Communications will open for subscription on November 8, 2021, and will be available for bidding till November 10, 2021. It had received a go-ahead from the markets regulator SEBI last week.

The price band for the offer is fixed at Rs 2,080-Rs 2,150 per share, with a face value of Rs 1 each. Earlier, the company was meaning to raise Rs 16,600 crore but then it increased its size by Rs 1,700 crore to Rs 18,300 crore. The new offer is expected to raise its valuation to $20 billion.

Investors can place bids in the lot of six shares and multiples thereof. Meaning, at the upper range of price bands, they will shell out Rs 12,900 to buy a single lot.

The company has reserved 75 percent of the offer for qualified institutional buyers and 15 percent for non-institutional buyers. The remaining 10 percent will be available for bidding by retail investors.

The anchor portion may open on November 3 and the share allotment will likely happen on November 15. The shares will be listed on the both National Stock Exchange and Bombay Stock Exchange by November 18, 2021.

Ahead of the fundraise, founder and CEO Vijay Shekhar Sharma said the company may not need more capital beyond the IPO unless there are any extraordinary circumstances. He said Paytm is making more money and the losses have been reduced.

The IPO will be the largest India’s equity markets have seen. The previous biggest IPO was that of Coal India, when the Maharatna PSU had raised Rs 15,000 crore over a decade ago.

Investors like Ant Financials, SAIF III Mauritius, and Alibaba will offload their stake, besides the founder Vijay Shekhar Sharma. Chief Financial Officer Madhur Deora had said besides Ant Financials, other shareholders are selling shares on a pro-rata basis.

Sharma had founded the company in 2000 as One97 Communications Ltd. Four years after the foundation, it moved into the digital payments industry. Since then, it has fended off competition from the likes of Walmart (PhonePe), Google (GPay), and Facebook (WhatsApp Pay). Currently, it is the third-largest player in the UPI space, controlling over 14 percent of the market.

“We are the largest payment company by user and merchant transaction. Rs 4 lakh crore GMV in FY21 entails commerce transactions,” Shekhar said in a press conference. Despite the competition, he said our customers and merchants are loyal to the platform.

And now it has ventured into businesses like banking, wealth management, credit cards, insurance, digital gold, selling the movie, flight tickets and whatnot.

Currently, it is the second-most valuable internet company, valued at $16 billion after its fundraising in November 2019. It has subsidiaries including Paytm E-Commerce, NS Mobile Technologies, Paytm, Paytm Payments Bank, Paytm Money, Paytm Mobile Solutions.

It had clocked revenue worth Rs 3,186 crore for the financial year 2021, versus Rs 3,540 in the previous fiscal. It is a loss-making company that narrowed its losses to Rs 1,701 during the same period, as compared to Rs 2,942 it reported in the previous year. Sharma said our incremental costs are lower than before and though the EBITDA margin is negative, we have seen some improvements.

The company aims to utilise the net proceeds from the IPO for acquiring customers and merchants and empower them with greater access to financial services and technology. The company has plans to earmark Rs 2,000 crore for acquisitions and strategic partnerships. And over 25 percent of the amount raised will be saved for general corporate purposes.

Among merchant bankers running the issue are names like JPMorgan Chase, Goldman Sachs, ICICI Securities, Morgan Stanley, Axis Capital, Citi Group, and HDFC Bank.

Also Read | Key things to know about Nykaa IPO

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