After slow start, Paytm IPO oversubscribed on final day
Public issue of Paytm, biggest in India so far, aims to raise Rs18,300 crore at a band of Rs2,080-2,150, valuing the company at Rs1.39 trillion at the top end
Paytm’s mammoth initial public offering, India’s largest such sale, drew bids for 1.89 times the shares on offer, as institutional investors bid aggressively on the third and final day of the share sale.
In the first two days, investors appeared to show a lukewarm response to the share sale of One97 Communications Ltd, with the company that runs the Paytm payments service receiving bids for less than half of the shares on offer. Paytm, which set out to raise ₹18,300 crore through its IPO, will likely make its stock market debut on 18 November
Exchange data showed that institutional buyers bid for 2.79 times the shares offered to them, while the retail book worth around ₹1,830 crore, was subscribed 1.66 times at the end of the final day. Overall, investors bid for 91.4 million shares for 48.3 million shares available.
“We are overwhelmed by the outstanding response to the Paytm IPO shown by institutional investors, financial giants, mutual funds and of course, retail investors,” said a Paytm spokesperson.
According to a 10 November Mint report, Canadian pension fund CPPIB doubled down on its bet on the Noida-based company, with a bid of around ₹1,280 crore.
The fund had also taken part in the IPO’s anchor book allotment a day before the issue opened to broader investors.
Last week, Paytm raised ₹8,235 crore from anchor investors, with the anchor round subscribed 10 times.
Of the net proceeds from the sale of new shares, ₹4,300 crore will be used for growing and strengthening the Paytm payments ecosystem, including the acquisition and retention of consumers and merchants. ₹2,000 crore will be utilized for investing in new business initiatives, acquisitions, and strategic partnerships.
In addition, residual funds will be used for general corporate purposes.
Paytm is India’s largest digital ecosystem for consumers and merchants, with a gross merchandise value (GMV) of ₹4 trillion in FY21.
GMV, or the total value of merchandise sold over a period, measures the use of a site to sell merchandise owned by others.
As of 30 June, Paytm offered payment services, commerce and cloud services, and financial services to 333 million consumers and 22 million registered merchants.
Paytm derives most of its revenue from transaction fees collected from merchants for payment services.
The company had negative cash flows from operating activities for FY19, FY20 and FY21, primarily due to operating losses and on account of additional working capital requirements.
Paytm, which started as a bill payments and mobile recharge platform in 2010, gradually created a payments-led ‘super app’ and evolved into a comprehensive payments ecosystem, covering payments, credit, insurance, merchants, wealth management, e-commerce services, among others.
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