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The stage is set for India’s biggest initial public offering (IPO), with the markets regulator approving the share sale by fintech giant One97 Communications Ltd, owner of the Paytm app.

The Securities and Exchange Board of India (Sebi) has cleared the Noida-based digital payments company’s 16,600 crore (roughly $2.2 billion) IPO, three people aware of the development confirmed.

“The company was hoping to list on the Indian exchanges by Diwali. However, it might look at a timeline by mid-November to make its public debut. The company is still deliberating, and nothing is finalized as of yet," said one of the three people cited above, all of whom spoke on condition of anonymity.

Paytm, India’s second most valuable startup, is expected to file its red herring prospectus with the regulator next week, the second person said.

In July, it had filed its draft prospectus, proposing to sell new shares worth 8,300 crore, and existing shares worth another 8,300 crore.

The company plans to use 4,300 crore of the fresh issue to grow its existing business lines and acquire new merchants and customers. Investment banks, including Morgan Stanley, Goldman Sachs Group Inc., Citigroup Inc. and ICICI Securities Ltd, are managing the share sale.

Mint reported on 7 October that the company was seeking a valuation of $20-22 billion, based on initial investor feedback. The company was valued at $16 billion in its last fundraising.

It has been in talks with investors Abu Dhabi Investment Authority and Singapore’s GIC Pte to participate in the IPO. BlackRock Inc. and Nomura Holdings Inc. were also in discussions to bid for Paytm’s IPO, Mint reported on 7 October.

Paytm did not respond to Mint’s queries until press time.

Over the past week, other startup unicorns, including Nykaa and insurtech platform PolicyBazaar, have received a Sebi nod to go public.

By the first week of October, the amount of money raised in IPOs this year touched $10.8 billion, according to Bloomberg data.

According to its draft prospectus, Paytm’s fresh share sale was expected to include a pre-IPO placement of 2,000 crore, to be utilized for acquisitions, strategic initiatives, and new businesses.

However, Bloomberg reported on Thursday that the company decided not to go ahead with its pre-IPO fundraising because of unfavourable valuation outcomes with investors. “The decision also allows Paytm to adhere to its original timelines of listing. Instead, it will be listing for an IPO directly," a fourth person said.

Led by founder and chief executive Vijay Shekhar Sharma, the 11-year-old Paytm has expanded beyond digital payments into newer categories of lending, gaming, wealth management, financial services and digital commerce.

However, the company continues to make losses.

For the year ended 31 March, Paytm’s consolidated revenue shrank 11% to 3,187 crore, but it managed to cut losses by 42% to 1,701 crore. However, under the risk factors of its draft documents, Paytm stated that it has incurred losses for three consecutive years and doesn’t expect to be profitable in the foreseeable future.

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