The Paytm IPO would comprise a fresh issue of shares worth Rs 8,300 crore ($1.1 billion) and an equally large secondary share sale, the Noida-based fintech startup has told the Securities and Exchange Board of India (Sebi), according to the draft red-herring prospectus accessed by The Economic Times.
Significant investors—including China’s Ant Group and Alibaba Group Holding Ltd., as well as Japan’s SoftBank Group Corp. and Elevation Capital—will be selling shares through an offer for sale (OFS).
The size of the fresh issue can be lower if Paytm raises Rs 2,000 crore in a pre-IPO round, as is being planned by the company. “If the Pre-IPO placement is completed, then the fresh issue size will be reduced to the extent of such pre-IPO placement,” according to the DRHP.
As reported by ET on Thursday, Paytm investors, most significantly Ant Group, are expected to dilute their stakes in the company via an OFS in the IPO. The OFS component in the IPO will be Rs 8,300 crore.
Though the company didn’t disclose the valuation it’s aiming for, sources told ET that Paytm is targeting a valuation anywhere between $24 billion and $30 billion.
The Paytm IPO, which is likely to hit the national stock exchanges in November, will be one of the largest initial share sales in dollar terms after Coal India (~$3.3 billion) in 2010 and Reliance Power (~$2.4 billion) in 2008.
According to the ET report on Thursday, Ant Group is likely to sell about 5% of its 30.33% stake in Paytm parent One97 Communications before the latter debuts on Indian exchanges. This is because Paytm wants to bring down Ant Group’s stake to below 25% to comply with Sebi norms for listing as a “professionally managed company”, sources said.
In FY21, One97 saw consolidated revenue from operations fall 14% year-on-year to Rs 2,802 crore, according to estimates shared in its annual report. Losses, however, narrowed to Rs 1,701 crore in FY21 from Rs 2,942 crore in FY20. Marketing and promotional spends declined 61% to Rs 532 crore while total expenses fell to about Rs 4,783 crore from Rs 6,138 crore a year earlier.
ET, which sourced the report independently, has reviewed a copy of the annual report. The audited financial figures are yet to be filed with the Registrar of Companies.
The company reported flat consolidated revenue in FY20 for a second consecutive year, as it cut spending on discounts, cashbacks and promotions, which helped reduce losses by 30% but impacted revenue growth.
Founded by Vijay Shekhar Sharma, Paytm is currently the second most valued Indian startup at $16 billion.