Paytm looking to launch Rs 16,600 crore IPO by October

Indian Fintech and payment facilitator, Paytm is all set to launch their highly anticipated IPO in October. As expected, 2021 has proved to be a highly active year for the Indian new-age tech start-ups in the primary market. The online food-delivery company, Zomato, has already joined the stock market with healthy participation from investors.

Paytm plans to float a Rs 16,000 crore IPO that will contain both primary and secondary components. The company filed draft papers with SEBI on July 15, hoping to get approval by mid-September to launch the public offer as soon as possible. According to the draft paper, the company plans to raise Rs 8,300 crores in new shares and another Rs 8,300 crore through offer for sale (OFS) equities by existing investors, such as the Alibaba group firm.

Alibaba group firm, Antfin Holding BV, would dilute a five per cent stake to bring down its holding ratio below 25 per cent to match compliance requirements. Other investors, such as Alibaba.com Singapore E-commerce Pvt. Ltd. and Elevation Capital Holding V Fii Holding, and a few more, will also reduce their stakes during the public offer. Company founder, Vijay Sharma, will also lower his stakes.

Paytm plans to utilise Rs 4300 crore from the proceeds of the new share sale to grow and strengthen the Paytm ecosystem by acquiring merchants and consumers and providing them with access to efficient technology and financial services. Further, Rs 2000 crore has been earmarked for improving business initiatives, enforcing acquisitions and partnerships. Around 25 per cent of the funds will be used for general corporate purposes.

Paytm is India’s leading fintech and digital payment service provider. Though the company mentioned a negative cash flow of Rs 222.1 crore in the draft paper its losses improved from Rs 2943.3 crore in FY 20 and Rs 4,235.5 crore to Rs 1704 crore in FY 21. Their merchant base grew to 2.11 crore in March 2021 against 1.12 crore in March 2019. During the same period, merchandise value doubled from Rs 2.29 lakh crore to Rs 4 lakh crore. They even expect to reach break-even in eighteen months.

Market experts predict high demand for Paytm when it hits the market. There will also be a Rs 2000 crore of pre-IPO placement for institutional investors. And with an IPO size of Rs 16,600 crore, their post-issue valuation will touch USD 30 billion.

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