India's Paytm to file draft prospectus next week for US$ 2.3 billion IPO

One97 Communications, the parent company oof Paytm (a digital payments company) is expected to file its draft red herring prospectus (DRHP) with SEBI shortly after the company's EGM scheduled for July 12, 2021, according to multiple industry sources.

The collective size of the IPO, comprising both fresh issue and the sale offer by selling shareholders, is expected to be around US$ 2.2 billion to US$ 2.3 billion. The size is also expected to be increased later if needed.

One of the industry sources said, “The idea is to file the papers with the regulator after the IPO approval from the shareholders at the EGM. So, the filing could happen on the same day or a few days later.”

Another the industry sources said, “Seven investment banks, such as HDFC, Morgan Stanley, Goldman Sachs, JP Morgan, ICICI Securities, Axis Capital and Citi have been confirmed.”

According to industry sources, “For this mega issue, they are intending for a valuation between US$ 24 billion and US$ 25 billion.”

If plans set, Paytm’s initial share sale is expected to surpass Coal India Ltd.’s offering, which raised Rs. 15,000 crore (US$ 2.01 billion) in 2010 in the India’s largest IPO so far.

Paytm refused to comment in this matter. HDFC bank, Morgan Stanley and ICICI Securities also refused to comment as well.

Earlier, Paytm had scheduled an extraordinary general meeting (EGM) on July 12 to get shareholders’ approval to raise Rs. 12,000 crore (US$ 1.61 billion) through a fresh issue of shares.

The stakeholders will also decide if Mr. Vijay Shekhar Sharma, founder and chief executive could be declassified as the promoter as he does not hold the required 20% stake as per SEBI standards to be a promoter. Currently, he owns 14.61% stake in the company.

Key shareholders of Paytm include Alibaba's Ant Group which owns 29.71% stake, while Softbank Vision Fund holds 19.63% stake and Saif Partners holds 18.56% stake.

Ahead of its IPO, Paytm has registered a revenue of Rs. 3,186 crore (US$ 427.68 million) for FY21, as compared to Rs. 3,540 crore (US$ 475.20 million) in FY20.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.