Paytm files papers for ₹16,600 cr IPO
The company to use funds for acquisitions, strategic initiatives, entering new biz
NEW DELHI: One97 Communications Ltd, the owner of the Paytm payments app, on Friday sought the markets regulator’s approval for its ₹16,600 crore initial public offering that is poised to become the country’s biggest initial share sale.
As part of the IPO, India’s most valuable startup will sell new shares worth ₹8,300 crore, Paytm said in its draft share sale documents. Existing shareholders will sell stocks worth another ₹8,300 crore through the IPO. Vijay Shekhar Sharmafounded Paytm hopes to tap the demand for stocks of internet firms in India, where the disruptions caused by the pandemic has triggered a surge in the usage of online payments, shopping and food ordering apps.
The fresh share sale will include a pre-ipo placement of ₹2,000 crore, which the company will use for acquisitions, strategic initiatives and entering new businesses. Earlier this year, Paytm applied for the New Umbrella Entity licence from the banking regulator, partnering with Ola Financial Services and fintech Zeta, among others through consortium, Foster Payments Network Ltd.
The company plans to use ₹4,300 crore of the fresh issue to grow its existing business lines and acquire new merchants and customers.
The company may increase its offer size by 20%, based on the feedback it receives from ongoing investor road shows, as allowed by Securities and Exchange Board of India (Sebi) norms, said an investment banker aware of the discussions.
Paytm investors who may be looking to sell their shareholding include founder Vijay Shekhar Sharma; Elevation Capital (formerly SAIF Partners), Softbank Vision Fund, Alibaba and Ant Financial.
For the year ended 31 March, Paytm’s consolidated revenue shrank 11% to ₹3,187 crore, but it managed to cut losses by 42% to ₹1,701 crore.
Highlighting the risks in its draft documents, the company stated that it has incurred losses for three consecutive years and doesn’t expect to be profitable in the foreseeable future.
“Because the market for our platforms, products and services is evolving, it is difficult for us to predict our future results of operations or the limits of our market opportunity,” the company said.
Paytm now expects its operating expenses to increase significantly after the listing, considering the additional legal and accounting fees.
Paytm accepted that it is a foreign-owned and controlled company and will remains so even after the domestic listing.
They had faced criticism from some quarters for its Chinese investors after border tensions between the two countries rose
“Our company is a foreignowned and controlled company. As a foreign-owned and controlled company, our company is subject to various requirements under the consolidated FDI Policy and other Indian foreign investment laws,” the company said.