Paytm may be valued at around $24 billion in India’s biggest IPO
One 97 Communications’s board may meet on Friday to discuss details of the listing and seek approval from the directors
Paytm, India’s largest online payments company, plans to raise as much as $3 billion ( ₹21,700 crore) by selling shares to the public by the end of this year, four people aware of the development said.
One97 Communications India Ltd, which runs the Paytm service, is in talks to hire investment banks for its initial share sale in India, and a few law firms have already been appointed to help with regulatory aspects, the people said on condition of anonymity. The payments company is likely to raise $2.5-3 billion, they said.
The company is in discussions with investment banks, including Morgan Stanley, Citigroup and JP Morgan, for its proposed initial public offer (IPO), said one of the four people who is directly aware of the discussions. The person added that the company could look at a public listing by the end of the year, around November.
One97 Communications, backed by marquee investors such as SoftBank, Ant Financial and Berkshire Hathaway, could potentially seek a valuation of $22 billion to $24 billion (around ₹1.74 trillion) from the India listing, a second person said.
“The company has appointed law firm Khaitan and Co. to start work on its proposed IPO. Khaitan will be the main legal counsel for the company. A few other firms have also been hired to represent the investors in the company. The exact details of the share sale, how much the company will raise and which investors will sell shares and how much are still to be worked out," said a third person.
One97 Communications’s board is expected to meet on Friday to discuss details of the listing and seek approval from the directors. The company will finalize the details for the public offering in the coming four weeks and will work towards submitting its draft IPO documents later this year with financial details for the year ended 31 March, said the fourth person.
The company has raised more than $4.4 billion in equity funding so far. Ant Financial holds almost 30% in One97 Communications, followed by Japan-based SoftBank (20%), Elevation Capital (18.56%), and founder Vijay Shekhar Sharma owning almost 14%, in the company he founded back in 2010.
“There is increased pressure on Paytm to give an exit to investors, and follow-on rounds may not help its cause. Further, Ant Financial is also looking to sell stake in Indian companies," said an investment banker who didn’t want to be named.
A Paytm spokesperson declined to comment on the development. A spokesperson for Khaitan & Co was unavailable for comments. JP Morgan declined to comment. Emails sent to Morgan Stanley and Citi remained unanswered.
Currently, One97 Communications houses the firm’s travel and entertainment ticketing business, its wealth management platform, Paytm Money, and gaming venture, Paytm Games, among other subsidiaries.
One97 Communications reported a revenue of ₹3,628.85 crore for the year ended March 2020, with losses shrinking 30% to ₹2,942.36 crore from ₹4,217.20 crore in the previous year. Revenue was almost flat from ₹3,579.6 crore in FY19. Paytm cut its total expenses by 20% to ₹6,226.31 crore in 2019-20 from ₹7,730 crore in FY19.
The company housed its wallet and payments under Paytm Payments Bank Pvt. Ltd during its launch in 2017, with founder Sharma owning 51% in the entity and the rest owned by One97 and its other subsidiaries.
According to a 27 May report from research firm Bernstein, the next phase of growth for Paytm is expected to be led by delivering credit tech products.
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