Digital payments and financial services company Paytm is all set to hit the markets with its Rs. 16,600 crores IPO in October, which is likely to be the largest ever in India. The company has already filed a draft prospectus with SEBI for its initial share sale on 15 July 2021.
Here’s all you need to know about the upcoming IPO before investing.
Key Highlights about Paytm IPO
As per reports, Paytm expects a response from the market regulator by mid-September, after which it will proceed with the listing at its earliest.
Here are a few key highlights about the IPO:
- The company is planning to raise Rs. 8,300 crores through a fresh issue and another Rs. 8,300 crores through an offer for sale.
- Paytm founder, CEO, and Managing Director Vijay Shekhar Sharma and Alibaba Group will dilute a portion of their stake in the offer for sale.
- The company is also considering pre-IPO funding rounding up to Rs. 2,000 crores, and it will adjust the share size accordingly if that happens.
- Paytm has not yet divulged the valuation it is seeking from this IPO. However, as per reports, it is targeting a valuation of $24 – $30 billion.
But, how does the company plan to utilise the proceeds from this IPO?
Paytm plans to fulfil the following objectives with the proceeds collected:
- 4,300 crores to strengthen and grow its ecosystem through retention and acquisition of its merchants and consumers. This will be done by providing them with better access to financial services and technology.
- 2,000 crores for acquisition and strategic partnerships and new business initiatives.
- The rest of the proceeds will be used for general corporate uses.
Here’s a look at Paytm’s financial report to aid interested investors gain perspective:
Paytm Financials in FY 2020 – 2021
- The company reported total revenue of Rs. 3,187 crores
- Paytm’s total assets stood at Rs. 9,151 crores
Even though the company experienced a loss of Rs. 1704 crores in FY 2020 – 2021, it managed to bring down the same from Rs. 1,943 crores in the previous fiscal.
Why Should You Invest in Paytm IPO?
Paytm is a financial services company that focuses on various services like recharge, money transfers, online payments, etc. Since its inception in 2010, the company has added various other verticals to expand its business.
Some of its business includes mutual funds, Paytm Mall, Paytm Payments Bank, and many more.
Still wondering why you should invest in the upcoming Paytm IPO?
Have a look at the company’s potential strengths that will help you get a clearer picture:
- It is a trusted company with a pan-India reach
- Paytm company focuses on deep insights of Indian consumers and merchants
- It believes in innovation and builds in-house technology
- Follows an ecosystem that allows the company to address large market opportunities with ease
- It houses experienced promoters that help build a strong management team
Paytm IPO – Potential Red Flags
Paytm also mentioned in its DRHP about applying to the RBI for a NUE (New Umbrella Entity) to incorporate a new retail payments body. It plans to do so through a group subsidiary, Foster Payments Network Ltd., and nine other consortium partners.
However, in June 2021, RBI introduced a rule that prohibits investors from owning more than 20% voting rights in PSO (Payments Systems Operator) if they do not obey the rules of the FATF (Financial Action Task Force).
This can hinder the company from future investments in the New Umbrella Entity.
The digital payments company says that it will continue to make losses in the near future because the market for such platforms is still evolving. It further gets difficult to predict the future because of limited market opportunities.
However, Paytm is still expecting to increase its operating expense by hiring additional personnel and expanding infrastructure and operations in the country and abroad.
Frequently Asked Questions
- Who is the registrar of Paytm IPO?
The registrar of Paytm IPO is Link Intime India Pvt. Ltd.
- Where is the Paytm IPO getting listed?
The shares will be listed on both BSE and NSE, expectedly.
- Which is the parent company that owns Paytm?
One97 Communications is the parent company that owns Paytm.