PAYTM: WORLD BIGGEST PAYMENT COMPANY ?

Paytm IPO to be the biggest in the country after Coal India's issue back in 2010 wherein the state-owned had garnered ₹15,200 crore

Paytm's parent One97 Communications will come out with its initial public offering (IPO) next week on Monday, November 8 with the price band fixed at ₹2,080-2,150 per share, implying a valuation of around ₹1.48 lakh crore. The three-day share sale will conclude on November 10.

The IPO comprises issuance of fresh equity shares worth ₹8,300 crore and Offer for Sale (OFS) by existing shareholders to the tune of ₹10,000 crore. The ₹18,300 crore-offer will be the biggest in the country after Coal India's issue back in 2010 wherein the state-owned had garnered ₹15,200 crore. The company skipped pre-IPO funding round to expedite launch of the initial share sale.

The company plans to use proceeds of the fresh issue to grow its business lines and acquire new merchants and customers. Paytm, led by founder and chief executive Vijay Shekhar Sharma, has expanded beyond digital payments into newer categories of lending, gaming, wealth management, financial services, and digital commerce.

Almost 75% of the issue worth ₹13,725 crore is reserved for qualified institutional buyers (QIBs), with 10% of the issue worth ₹1,830 crore reserved for retail buyers, the BSE filing showed.

In the first quarter of FY22, the company's payments and financial services revenue alone stood at ₹689.4 crore contributing to 77 per cent of its total revenue. The company incurred a loss of ₹2.9 crore in the quarter ended June 2021.

According to the red herring prospectus (RHP) filed by Paytm, Ant Group is selling shares worth ₹4,704.40 crore, while Alibaba is selling about ₹785 crore worth shares

Japan's SoftBank, another major investor in Paytm, is slated to sell shares worth ₹1,689 crore and Elevation Capital will sell shares with an aggregate value of more than ₹2,030 crore.

Sharma, who owns close to 15% in the company, will sell shares worth over ₹402 crore.

According to the RHP, its operational revenue during the June quarter of financial year 2022 jumped to over ₹890 crore, compared to ₹551 crore in the same period a year ago, a jump of more than 61%.

Its revenue is driven by payment and financial services, which now contribute around 77% of its total revenue.

Paytm’s losses for the June quarter was close to 382 crore compared to over 284 crore in the same period a year ago.

As per the RHP, Paytm has a total user base of 337 million and over 21.8 million registered merchants as of June 30, 2021.

Paytm said it will use the IPO proceeds to grow and strengthen the Paytm ecosystem ‘including through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services. It will use the capital to invest in new business initiatives, acquisitions, and strategic partnerships, besides general corporate purposes.

The company has mandated investment banks Morgan Stanley, Goldman Sachs Group Inc, Citigroup Inc and ICICI Securities Ltd to manage the issue.