Paytm, digital payments and financial services firm has filed a draft red herring prospectus (DRHP) with market regulator SEBI, to launch Rs 16,600-crore IPO. The public issue will comprise fresh issue of equity shares worth Rs 8,300 crore and an offer-for-sale (OFS) of shares worth Rs 8,300 crore. The price band for the Paytm IPO will be determined either at the time of filing the red herring prospectus (RHP) or prior to the IPO opening for the subscription. 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 will be joint global coordinators and book running lead managers to the issue. Link Intime India Private will be the registrar to Paytm IPO.
According to the draft papers, Antfin (Netherlands) Holding B.V. is the largest shareholder for Paytm, holding 29.6 per cent of the pre-offer paid-up equity share capital. Alibaba.com Singapore E-Commerce Private Ltd holds 7.2 per cent stake. There are no listed companies in India that engage in a business similar to Paytm. The weighted average of return on net worth stands at 36.9 per cent. Paytm has planned to utilise the Rs 4,300 crore worth of net proceeds for growing and strengthening Paytm ecosystem, through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services. While Rs 2,000 crore will be used for investing in new business initiatives, acquisitions and strategic partnerships; and for general corporate purposes.
The Softbank-backed company has reserved up to 75 per cent of the net offer for qualified institutional buyers (QIBs). The company, in DRHP, said that it might allocate up to 60 per cent QIB portion to anchor investors. Not less than 15 per cent of the net offer will be available for allocation on a proportionate basis to non-institutional investors (NIIs) and the remaining 10 per cent to retail individuals. Paytm has also reserved a portion of net offer for eligible employees of the company.
Paytm shares in unlisted market in high demand
In the unlisted market on Friday Paytm shares were trading at Rs 2,400-2,420 per share, according to the people who deal in shares of unlisted companies. The shares of One97 Communications (Paytm) have been in high demand in the unlisted market since May due to the IPO buzz. The shares which were trading at Rs 10,000 per piece, swiftly went up to Rs 27,000 per piece amid IPO buzz. “After the sub-division of shares from face value to Rs 10 to Re 1, Paytm shares were trading at around Rs 2,400-2,425 per piece, currently, which values Paytm at around 19.5 billion dollars,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online. Doshi added that as per the market buzz, Paytm is eyeing for 25-30 billion dollars valuations for its mega IPO which is likely to hit markets by Diwali 2021 and this is the core reason behind heavy demand of Paytm shares in unlisted market. However, it would be interesting to see what valuations they get on D-Street.
As per the DRHP of Paytm, SoftBank, Paytm’s second-largest investor, is not offering its shares in its coming IPO, which suggests that Softbank expects that there is still a lot of juice left in Paytm. “We expect Paytm’s IPO to be a big hit. Paytm has had the highest traction in the last 40 Days in the PreIPO market. With the DRHP filed, the prices will go further north,” Rajesh Singla, Founder & CEO of pre-IPO consultancy firm Planify India, told Financial Express Online.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)