The Initial Public Offer (IPO) of One97 Communications, which operates under Paytm brand name, is now open for subscription. The Rs 18,300 crore-offer is the biggest in the country after Coal India's IPO back in 2010 wherein the state-owned company had garnered Rs 15,200 crore.
Paytm IPO is available in the price band of Rs 2,080 - Rs 2,150 per share, implying a valuation of around Rs 1.48 lakh crore. The company skipped pre-IPO funding round to expedite the launch of the initial share sale. The IPO will close for subscription on November 10.
Paytm IPO comprises issuance of fresh equity shares worth Rs 8,300 crore and Offer for Sale (OFS) by existing shareholders to the tune of Rs 10,000 crore. Through the OFS, One97 Communications Managing Director and CEO Vijay Shekhar Sharma will offload shares worth up to Rs 402.65 crore while Antfin (Netherlands) Holdings will sell shares to the tune of Rs 4,704.43 crore. Besides, Alibaba.com Singapore E-Commerce will sell up to shares worth Rs 784.82 crore, Elevation CapitalV FII Holdings (Rs 75.02 crore), Elevation Capital V Ltd (Rs 64.01 crore), Saif III Mauritius (Rs 1,327.65 crore), Saif Partners (Rs 563.63 crore), SVF Partners (Rs 1,689.03 crore) and International Holdings (Rs 301.77 crore), as per the offer document.
In a pre-IPO conference on Thursday, Sharma said he has received personal messages from investors who want to invest for the first time in the country and asserted that "this is the age of India".
Paytm President and Group CFO Madhur Deora said that interest has been tremendous from Indian as well as global blue chip investors from the time the company filed the DRHP (Draft Red Herring Prospectus). "We always had a very high quality share base that has benefited us," Madhur said.
Last week, Paytm said that it raised Rs 8,235 crore from anchor investors ahead of its initial share sale. The anchor investor round saw participation from Blackrock, CPPIB, Birla MF, GIC and other blue-chip funds leading to 10 times oversubscription of the shares, as per a stock exchange filing. Blackrock invested Rs 1,045 crore, Canada Pension Plan Investment Board Rs 938 crore and GIC Rs 533 crore. The round saw participation from pension funds, superannuation funds as well as sovereign wealth funds like Government of Singapore, CPPIB, ADIA, APG, City of New York, Texas Teachers Retirement, NPS Japan, University of Texas, NTUC Pension out of Singapore, and University of Cambridge. The largest dedicated emerging market investors like Standard Life Aberdeen, UBS and RWC have also invested. With this, Paytm has already secured 45 per cent of its Rs 18,300 crore IPO. Paytm's anchor round's size alone can be termed as the eighth largest private company IPO in India.
"Big tech firms are going for the big kill and Paytm is next in line, ready for the biggest IPO of the decade. It is highly likely to be a successful IPO, from a long term perspective, this seems more like a speculative than a prudent investment bet," Richa Agarwal, Senior Research Analyst at Equitymaster, said.
"The growth shown by the revenue and loss ratio of Paytm doesn’t seem to be exciting. However, the Company is being successful in narrowing its losses by restricting the branding expenses. The company’s plans to use proceeds of the fresh issue to grow its business lines and acquire new merchants and customers will decide the further growth trajectory. Keeping in view of overall business model, retail investors can subscribe to the issue," Ravi Singhal, Vice Chairman, GCL Securities Limited, said.
According to research firm Redseer, Paytm has mobile payments transaction volume market share of approximately 40 per cent, and wallet payments transaction market share of 65-70 per cent in India as of FY 2021. As per the offer document, demonetisation in 2016 also played a role in pushing merchants to accept payments digitally and led to growth in products like QR and wallets.
With several factors, including government initiatives and reforms, improving technology, increasing reach and awareness, digital payments are expected to more than double from USD 20 trillion in FY 2021 to USD 40-50 trillion by FY 2026.