Alibaba Group Holding and its payments arm ANT Financial hold almost 37% stake in the payments major, while Softbank through its Softbank Vision Fund and Elevation Capital hold almost 20% stake each
BENGALURU: One 97 Communications India Ltd., parent brand of digital payments major Paytm, which is preparing for its public debut by the end of November, will look to raise $1billion-$1.5 billion as part of primary share sale, during the initial public offering (IPO), said two individuals directly aware of discussions.
While the final contours of the public listing still need to be outlined, the company will undertake a share sale worth at least $3 billion during its IPO.
It will taking the qualified institutional buyers (QIB) route to list, where it will raise primary funds from a fresh issue of shares to QIBs, as per norms of the Securities and Exchange Board of India (Sebi), said a third individual who was aware of the discussions.
Both QIBs and retail investors will be offered a portion of the stake of existing investors, during the listing process, the third person said.
“The QIBs will participate in the fresh issuance of shares by the company and will also look to buy shares of existing investors including those by Elevation Capital, ANT Financial and Softbank. Retail investors will also be offered shares of these existing investors," said one the person quoted above who spoke on condition of anonymity.
Paytm is also in talks with Axis Capital, ICICI Securities, and SBI Capital Markets, among others, for the listing process. Last week, Mint reported that the company has held talks with bankers JP Morgan, CitiGroup and Morgan Stanley, for its mega listing.
The company is looking to file its draft red-herring prospectus (DRHP) by July this year, and may look to bring on QIBs as anchor investor during its pre-IPO fundraise, after July, above quoted individuals told Mint.
“There has been substantial inbound requests to invest in Paytm’s pre-IPO fundraise. Typically, this fundraise would be 20%-30% of what the company is looking to raise during the IPO process. The company is still locking on bankers and will decide on the pre-IPO details in the next two weeks, after final discussion with bankers," said an individual who spoke to Mint, on condition of anonymity.
So far, One 97 Communications India has raked in over $2.8 billion in primary fund raise.
At present, Alibaba Group Holding Ltd and its payments arm ANT Financial hold almost 37% stake in the payments major, while Softbank through its Softbank Vision Fund and Elevation Capital (formerly SAIF Partners) hold almost 20% stake each in the entity, respectively. Founder Vijay Shekhar Sharma’s stake stands at 14.67% in the company.
One 97 Communications currently houses the company’s movie and travel ticketing business; its wealth management platform, Paytm Money; its online payment gateway business, Paytm Payment Gateway, along with its offline point-of-sale business.
Paytm declined to comment on Mint’s queries on the matter.
“Currently, there is a strong risk appetite and liquidity gains in the market for Paytm’s IPO to sail through. However, the challenge could be that Paytm is not a unique story to sell since existing large banks, with higher profitability metrics, have also made the shift to digital and fintech offerings. Further, Indian investors are not keen to continue backing companies with high losses, so Paytm will have to find a route to profitability in the long run," said Ajay Garg, managing director of Equirus Capital, an investment bank.
One97 Communications reported a revenue of Rs3,628.85 crore for the year ended March 2020, with losses shrinking 30% to Rs2,942.36 crore. Revenue was almost flat when compared to FY19's Rs3,579.6 crore. Paytm cut its total expenses by 20% to Rs6,226.31 crore in 2019-20 from ₹7,730 crore in FY19.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!