As Paytm’s IPO gains momentum, it attracts more and more foreign bidders.
In 2009, Paytm was launched by One 97 Communications as their first digital mobile payment platform. The platform has found popularity among the crowds and now has a brand value of $6.3 billion. The platform allows cashless transactions at stores, mobile data recharge and top-ups, digital money transfers, bill payments, digital banking services, purchase tickets, play games, make investments and lots more. The platform also serves merchants’ needs such as advertising, loyalty solutions, offer products, etc.
The company has 333 million total customers, 114 million annual transacting users, and 21 million registered merchants.
Paytm is seeking to raise funds worth $2.2 billion through this IPO making it the largest ever Indian IPO over a decade. The IPO seems to gain traction since it was announced as it has been receiving demand from sovereign wealth funds (SWFs) and foreign institutional investors (FIIs) who value the company at $20-22 billion. There have also been talks of a SWF offering an investment of $500 million of shares as it expects the valuation of the company to grow to $30billion.
At present, the IPO has gained new investors on their list of bidders such as US-based Alkeon Capital, funds managed by Morgan Stanley, Goldman Sachs and Canada's CPPIB continues to be in talks with the firm’s anchor investment slot. Potential European companies who were looking to invest in, now scrapped off, Ant Group’s IPO, may invest their funds in Paytm’s IPO.
Paytm is hoping for a pre-Diwali IPO launch and waiting for the final green signal from SEBI, which should come through soon.
The $2.2bn IPO will be divided between fresh issuance of share and OFS (Offer For Sale) by its existing shareholders each worth $1.1bn, allowing Pre-IPO round to raise ~$270mn (approx. Rs.2000cr). The details of Pre-IPO round are not written in stone as they would depend on investor requirements, tax implications and the lock-in period.
Founder Vijay Shekar Sharma, and firm’s key shareholders such as SoftBank, Ant Group and Elevation Capital will sell a part of their stake in OFS.
Paytm IPO’s draft red herring prospectus said 75% of public issue will be reserved for qualified institutional buyers (QIBs) out of which Up to 60% may be allotted to anchor investors, 15% is for non-institutional investors and the balance 10% for retail investors.
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