SUMMARY
The fintech unicorn had filed its DRHP with the market regulator in July
Paytm will issue a fresh share worth INR 8,300 Cr and INR 8,300 Cr will be an offer for share, giving the existing investors to offload their shares
This will be India’s biggest public issue so far after Coal India, which raised INR 15,000 Cr
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The much anticipated initial public offering (IPO) of One97 Communications, which runs the digital payment unicorn Paytm has received SEBI’s approval for its IPO.
The fintech giant had filed its DRHP with the market regulator in July for raising INR 16,600 Cr. The IPO consists of a fresh issue of INR 8,300 Cr and an Offer For Sale (OFS) of another INR 8,300 Cr.
Founded by Vijay Shekhar Sharma in 2000, Paytm began its journey as a value-added service provider. It evolved over the years with different fintech solutions to become an online mobile payments firm.
Today, Paytm parent — One97 Communications operates Paytm Payments Bank Limited, Paytm General Insurance Limited, Paytm Life Insurance Limited, Paytm Money Limited, Paytm E-Commerce Private Limited, Paytm Entertainment Limited, among other smaller entities. These combine to give Paytm a strong acquisition channel for its core business of payments and fintech services.
According to its DRHP filing, Paytm had clocked revenue of INR 3,186 Cr in FY21 vs INR 3,540 Cr in FY20. Over the years, the fintech unicorn has narrowed losses to the tune of INR (4,235.5) Cr, INR (2,943.3) Cr and INR (1,704) Cr in FY19, FY20 and FY21, respectively.
According to Inc42 sources, Paytm might not go ahead with the pre-IPO plan in a bid to fast track its market debut timeline.
Earlier this month, valuation guru Aswath Damodaran valued the digital payments major at $20 Bn. However, traders expect the IPO to come at around $20 Bn-$24 Bn. According to an Inc42 source, Paytm is seeking a $20 Bn – $22 Bn valuation for its IPO.
Paytm was valued at $16 Bn in November 2019 when it raised $1 Bn from Ant Financials, SoftBank Vision Fund. Earlier it was reported that Paytm will be looking at a $25 Bn – $30 Bn valuation.
The fintech unicorn plans to utilise the proceeds from the IPO to strengthen its ecosystem and the acquisition and retention of customers.
According to its DRHP filing, the company will be using INR 4,300 Cr from the IPO proceeds to grow and strengthen its ecosystem by acquisition and retention of customers and merchants, and providing them with “greater access to technology and financial services”.
Paytm further plans to invest INR 2,000 Cr for new business initiatives, acquisitions and strategic partnerships.
According to company’s DRHP filing, Alibaba-led Ant Group, the single largest shareholder, holds 29.71% stake in the company, while SoftBank Vision Fund has 19.43% stake. Founder Vijay Shekhar Sharma currently owns 14.67% stake in the fintech giant.
The fintech giant, after filings its DRHP with the market regulator, had increased its employee stock option plan (ESOP) pool from a little over 24 Mn to 61 Mn, a 2.5X increase. The startup has already seen around 320 existing, and former employees convert their ESOPs into shares worth INR 529 Cr.
Paytm’s shares in the unlisted market have largely been on a surge since July, post-Zomato’s bumper listing, although plateauing sometimes amid valuation concerns. Currently, its unlisted shares are trading in the range of INR 3,200-3,300, lower from INR 3,600 a week ago. Traders anticipate its IPO to come in at INR 2,400.
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