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Business News/ Companies / News/  Paytm to raise $1.1 billion from anchor investors

Paytm to raise $1.1 billion from anchor investors

Participating investors include BlackRock Inc., Canada Pension Plan Investment Board and GIC Pte along with other sovereign wealth funds, one of the individuals quoted above said on condition of anonymity

The interface of Indian payments app Paytm is seen in front of its logo displayed in this illustration picture. (REUTERS)Premium
The interface of Indian payments app Paytm is seen in front of its logo displayed in this illustration picture. (REUTERS)

BENGALURU : One97 Communications Ltd, the company that runs the Paytm payments service, is set to raise $1.1 billion from anchor investors as part of India’s largest initial public offering, three people aware of the discussions said.

BlackRock Inc., Canada Pension Plan Investment Board and GIC Pte, along with other sovereign wealth funds, are likely to come in as anchor investors, one of the people cited above said on condition of anonymity.

Anchor investors are offered a part of the shares reserved for qualified institutional buyers a day before the IPO opens for subscription to the public, but they can’t sell their shares until 30 days after the listing.

Mint reported on 7 October that Singapore’s GIC and BlackRock were in talks with Paytm to participate as a part of its anchor round of investments. Other investors in talks with Paytm include sovereign wealth fund Abu Dhabi Investment Authority, the report said.

“The company’s anchor round is expected to be closed on 3 November. Some other established investors are expected to make their first investment in India by participating in Paytm’s public offering. The investment will be made through their tech-focused funds," a second person said, also requesting anonymity.

Paytm increased its issue size to 18,300 crore from 16,600 crore earlier last month.

The issue will include the sale of new shares worth 8,300 crore, with existing investors selling another 10,000 crore worth of shares as part of the increased IPO size. Roughly half of the offer for sale (almost 5,000 crore) by existing shareholders will be by Paytm’s biggest investor Ant Financial, which currently owns 29.6% of the company.

The company has set the price band at 2,080- 2,150 per share, and it will remain open for subscription during 8-10 November.

“There are a number of investors who want to subscribe to our entire anchor portion [...] We have money in the bank and are getting more customers and merchants at lower costs. We are positive that we will attract long-term shareholders and investors who will understand that the real value in Paytm is not about quarter-on-quarter profit delivery but on the long term change it brings," said Vijay Shekhar Sharma, founder, chairman and managing director, One97 Communications Ltd, in a 29 October interview.

The news around Paytm’s increased IPO size comes at a time when the company has decided against its 2,000 crore pre-IPO fundraising.

India’s market for first-time share sales is surging on debuts of tech firms, including Zomato Ltd that raised $1.3 billion. Among startups, beauty marketplace Nykaa’s IPO opened on 28 October, and financial marketplace PB Fintech Ltd’s public issue opened on 1 November.

Paytm plans to use 4,300 crore of the IPO proceeds to grow its existing business lines and acquire new merchants and customers. It has no immediate plans to invest in overseas markets. “International is something we will be focusing on, once we feel the India market is matured enough," Sharma said.

Led by Sharma, Paytm has expanded beyond digital payments into banking, credit cards, financial services and wealth management. It also supports India’s financial payments backbone, the Unified Payments Interface or UPI.

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Published: 01 Nov 2021, 08:27 PM IST
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