Paytm gets Sebi nod for mega Rs 16,600-cr IPO

New Delhi: Digital financial services firm Paytm has received market regulator Sebi’s approval for its Rs 16,600 crore initial public offer, a source involved in the process said on Friday.

The company expects to hit the bourses by the end of this month and is planning to skip the pre-IPO share sale rounds to fast-track listing.

“Sebi has given approval for Paytm IPO,” the source said on condition of anonymity.

The company’s plan of shelving the pre-IPO raise is not related to any valuation differences, the source added.

The proposed IPO, if successful, would be the largest such offer. Coal India’s Rs 15,200-crore initial public offer (IPO) in 2010 is the country’s largest one till date.

Paytm is looking at a valuation of Rs 1.47-1.78 lakh crore.

US-based valuation expert Aswath Damodaran, who is a professor specialising in finance at the Stern School of Business at New York University, has valued the unlisted shares of the firm at Rs 2,950 apiece.

According to the draft IPO documents, the company plans to raise Rs 8,300 crore through fresh issue of equity shares and another Rs 8,300 crore through the offer-for-sale route.

Paytm founder, managing director and chief executive Vijay Shekhar Sharma and Alibaba group firms will dilute some of their stake in the proposed offer-for-sale.

Alibaba group firm Antfin (Netherlands) Holding BV is expected to sell at least 5 per cent stake to bring its shareholding below 25 per cent to comply with regulatory requirements, according to a source.

As per the documents, investors selling stake include Antfin (Netherlands) Holding BV (which has a 29.6 per cent stake), Alibaba.Com Singapore E-Commerce Private Ltd (7.2 per cent) and Elevation Capital V FII Holdings Ltd (0.7 per cent).

Moreover, Elevation Capital V Ltd (which has a 0.6 per cent stake), SAIF III Mauritius Company Ltd (12.1 per cent), SAIF Partners India IV Ltd (5.1 per cent), SVF Panther (Cayman) Ltd (1.3 per cent) and BH International Holdings (2.8 per cent) will also sell stake.

The company has proposed to use Rs 4,300 crore for growing and strengthening the Paytm ecosystem, including through acquisition of consumers and merchants and providing them with greater access to technology and financial services.

Paytm plans to earmark Rs 2,000 crore for business initiatives, acquisitions and strategic partnerships and up to 25 per cent of the total fund raised through the IPO for general corporate purposes.

According to the documents, Paytm’s merchant base grew to 2.11 crore as on March 31, 2021 from 1.12 crore in March 2019, and gross merchandise value (GMV) almost doubled to over Rs 4 lakh crore in the financial year (FY) from Rs 2.29 lakh crore in FY 2019.

The company has reported a narrowing of its loss to Rs 1,704 crore in FY21, from Rs 2,943.3 crore in FY20 and Rs 4,235.5 crore in FY19.

Total income declined to Rs 3,186.8 crore in FY21, from Rs 3,540.7 crore in FY20.

Paytm has reported negative cash flow of Rs 222.1 crore in FY21 primarily due to operating losses and additional working capital requirement.