Paytm IPO, India’s Largest IPO, is Finally Set In Motion For November Launch

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Encouraged by the overwhelming response received by Zomato IPO, One97 has quickly filed draft papers for the much-talked Paytm IPO to India’s market regulators SEBI.

With the filing, Paytm has set the plan of launching the biggest Indian IPO (Initial Public Offering) in motion. The fintech startup is aiming to raise $2.2 billion (₹16,600 crore) to accelerate its growth and strengthen its presence in the market.

The Noida based startup unicorn has informed SEBI that Paytm IPO would comprise fresh sales of shares worth $1.1 billion (₹8,300 crore). The company has planned to sell an equally large number of secondary shares in the upcoming IPO.

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Paytm IPO: Big Picture

  • One97 Communications, Paytm’s parent company, has filed draft papers to SEBI to float the $2.2 billion IPO.
  • Paytm IPO would be the biggest Indian IPO. Coal India’s ₹15,200 crore IPO, launched in 2010, is the biggest Indian IPO to date.
  • Paytm is also planning to raise ₹2,000 crore in a pre-IPO round. If that happens the issue of fresh shares in paytm IPO would be lowered.
  • Many large investors, especially Ant Group, is expected to dilute their stake in Paytm via Offer for Sales (OFS) in the proposed Paytm IPO.
  • Ant Group is the biggest stakeholder in One97 Communications, the holding company of Paytm. The Chinese investment giant owns 30.33% of the company. However, the company is reportedly selling about 5% of its holding before Paytm IPO goes on the floor to comply with SEBI’s norms for listing.
  • Paytm valuation would soar to anything between $24 billion and $30 billion, conditioned to a successful IPO.
  • Paytm’s current valuation is estimated $16 billion.
  • Paytm is eyeing November month to launch its IPO.
  • SoftBank and Elevation Capital the other two large stakeholders own 18.7% and 17.65% in One97 Communications.
  • 14.97% stake of the company is owned by Paytm’s founder Vijay Shekhar Sharma.
  • While One97’s revenue in FY’21 fell by 14% YoY to ₹2,802 crore, the company’s losses also narrowed by 42% YoY to ₹1,701 crore.

Food For Thought

After SEBI relaxed its norms for companies to get listed, almost every startup unicorn is gearing to float its IPO in the next 12 months. Every startup wants to take complete advantage of impressive performance figures in FY’21. Driven by increased sales and narrowed losses due to decreased overheads during the pandemics, Indian startup unicorns see no better time than now to usher in the new era.

On the other hand, pressure to perform and make listed startups profitable would be the biggest challenge for these founders and top management. The real testing time for startup founders is about to begin. The success of Zomato IPO and definitely encouraged One97 management to float Paytm IPO, but it comes with its own set of new challenges as well. The upcoming equations in the stock market are going to be interesting.

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