BalrajOne97 Communications, the holding company of Paytm, a digital platform for consumers and merchants, has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for Rs 16,600 crore initial public offering (IPO). The offering comprehends a fresh issue of primary equity shares with a face value of Re 1 each worth Rs 8,300 crore and an offer for sale (OFS) by existing shareholders worth Rs 8,300 crore.
The company also plans for a possibility to conduct a Rs 2,000 crore pre-IPO placement. The primary issue size will be adjusted to that level if the pre-IPO placement is executed. The company currently holds 60.59 Cr equity shares outstanding and a total of 104 Cr accredited share capital. India’s second most valuable startup is expected to make its market launch in India around November 2021.
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Paytm, founded by Vijay Shekhar Sharma, seeks to capitalize on the spike in demand for internet company stocks in India, wherein the pandemic’s disturbance has prompted a growth in the use of online payments, e-commerce, and food ordering apps. On Friday, the IPO of food delivery app Zomato Ltd was oversubscribed 40 times, signifying a bull market. This will also be India’s largest public offering to date, surpassing Coal India’s record of Rs 15,000 crore raised over a decade earlier, demonstrating institutional investors’ desire for new-age Internet startups.
The issue’s associated global coordinators and book running leading managers will be Morgan Stanley India Company Private Ltd, Goldman Sachs (India) Securities Private Ltd, Axis Capital, ICICI Securities, JP Morgan India Private Ltd, and Citigroup Global Markets India Private Ltd. The registrar for the Paytm IPO will be Link Intime India Private.
Vijay Shekhar Sharma, the company’s founder, holds 14.6 percent of the company’s pre-offer equity shares, according to the DRHP filings. Sharma will remain the firm’s Chairman, Managing Director, and Chief Executive Officer. Ant Financials, a Chinese multinational corporation, owns 29.6% of the company through a subsidiary Antfin Holding B.V. headquartered in the Netherlands. Ant Group is expected to liquidate at least 5% of its shareholdings in the company to reduce its ownership below 25% in order to meet SEBI’s requirements for listing as a “professionally managed company,” according to reports. Softbank, a Japanese company, owns 19.6% of the company through two distinct investments. Saif Partners owns 19.2 percent of the company’s stakes.
The digital payment platform had handled 7.4 billion transactions, combining transactions made to merchants via its platform and peer-to-peer payments, as of FY21, with revenue from operations of Rs 2,800 crore from 114 million yearly transacting customers. In the fiscal year of 2021, the company lost Rs 1,701 crore, compared to Rs 2,942 crore in the fiscal year 2020 and Rs 4,230 crore in the fiscal year 2019. Paytm stated in its draft paper filings that it sustained losses over a period of three years and that it is not approaching profitability in the foreseeable future.