Paytm eyes $25 billion valuation in mega IPO
Files papers for ₹16,600-cr offering; to raise ₹8,300 cr through fresh equity
One 97 Communications, owner of the country’s biggest digital payments provider Paytm, has filed the offer document for the biggest ever initial public offering (IPO) in the country.
The IPO size is estimated at ₹16,600 crore, half of which will be a fresh fund raise by the company.
The remaining ₹8,300 crore will be secondary share sale by founder Vijay Shekhar Sharma, China’s Ant Financial and Alibaba, private equity major SAIF Partners, Softbank Vision Fund, and an arm of Berkshire Hathaway. Ratan Tata, who holds 75,000 shares through RNT Associates Private Limited, will also be selling shares of Paytm through the secondary sale.
Paytm has said it might consider a pre-ipo placement of up to ₹2,000 crore. This will reduce the fresh issue component in the IPO. Sources said the company was eyeing valuations between $25 billion (₹1.86 trillion) and $30 billion (₹2.24 trillion) in the IPO. This will catapult Paytm into the league of the top 10 most valued financial firms in the country. During its last round of funding, Paytm was valued at $16 billion (₹1.2 trillion).
Investment bankers said Paytm’s IPO would be launched before the end of the year. Typically, the Securities and Exchange Board of India takes two-three months to approve an offer document.
Paytm’s IPO filing comes on the heels of the success of India’s first unicorn IPO by Zomato. Other start-ups such as Mobikwik, Policybazaar, Cartrade, and Nykaa too are in the process of going public.
Zomato’s IPO was seen as a test case for other tech and start-up IPOS. Market watchers said its success was an endorsement of investors willing to overlook metrics such as profitability in the case of companies with high growth potential.
For the financial year ended 2020-21, Patym had reported losses of ~1,701 crore and a total income of ~3,187 crore. The company said it had taken steps towards reducing losses.
“The company has managed to achieve the same through careful planning, streamlining operations and processes, while also optimising marketing, other direct, as well as indirect costs,” it said in a statement.
The company has also worked towards bringing down its marketing costs from a high of ~3,408.3 crore in FY19 to ~532.5 crore in FY21.
The company has stated of the proceeds it intends to use about ~4,300 crore for growing and strengthening the Paytm ecosystem by acquiring and retaining merchants and customers. And another ~2,000 crore will be utilised for business acquisitions.
Paytm’s mobile app has an installed base of over 350 million. Paytm is also used by over 22 million online and offline merchants. It has developed its app on the lines of a super app as it offers a whole host of services, which include payments, investments, banking, ticketing and online shopping.
Morgan Stanley, Goldman Sachs, Axis Capital, ICICI Securities, JP Morgan and Citigroup are the investment banks handling the share sale.