Apart from Paytm’s managing director and CEO Vijay Shekhar Sharma, investors like China’s Ant Group and Alibaba and Elevation Capital, and Japan’s SoftBank are among the top investors for the stakes in the IPO.
Fintech giant Paytm launched its initial public offering for public subscriptions on Monday. The company is planning to sell shares in the price band of ₹ 2,080-2,150 per share, and retail investors can bid for a minimum of one lot of six shares. One lot of Paytm shares will cost ₹ 12,900 at the upper price band.
Apart from Paytm’s managing director and CEO Vijay Shekhar Sharma, investors like China’s Ant Group and Alibaba and Elevation Capital, and Japan’s SoftBank are among the top investors for the stakes in the IPO.
Paytm aims to utilize the returns from the IPO for various activities such as acquiring consumers and merchants and giving them better access to technology as well as financial services.
It will also invest in new business ventures, partnerships, and acquisitions, and the remaining funds will be used for other corporate activities.
Paytm allocated shares worth ₹ 8,235 crores to more than 100 institutional investors, including the government of Singapore, ahead of the country’s largest stock market listing.
According to a regulatory document which is dated November 3, Paytm was able to garner a lot of interest from 122 institutional investors who bought about 38.3 million shares for ₹ 2,150 apiece. Among the investors were BlackRock Global Funds, Canada Pension Plan
Investment Board and Abu Dhabi Investment Authority.
Paytm was launched about a decade ago as a platform for mobile recharging. It quickly grew after Uber listed it as a payment option. Its use increased further in 2016 as a ban on high-value currency banknotes in India boosted digital payments.
Various companies, including Paytm, have tried to tap capital markets this year for fund-raising because of record highs in the Indian stock market, which has surpassed other Asian countries so far this year.
According to Refinitiv data, 57 companies in India, including Nykaa, Oyo Hotels and Rooms, and Policybazaar, have raised $17.22 billion through IPOs this year by October 31, which is much higher compared to $8.54 billion raised by 49 companies during the same period last year.
Paytm’s IPO is expected to be the biggest in the country’s corporate history, breaking a record held by Coal India Ltd, which raised ₹ 15,000 crores more than a decade earlier.
WHAT IS PAYTM?
Paytm is one of the largest payment platforms in India. The company has a gross merchant volume (GMV) of over Rs 4 lakh crore in FY21.
It offers payment services, commerce and cloud services, and financial services to 33.7 crore consumers and over 2.2 crore merchants registered on the platform as of June 30.
In FY21, revenue from payment and financial services constituted Rs 2,109.20 crore (75.3 percent).
Paytm enjoyed a market share of approximately 40 percent in the case of mobile payments transaction volume and 65-70 percent in the case of wallet payment transactions during the financial year 2021.
KEY RISKS
According to KRChoksey Research, there are two risks, regulatory and execution, which investors have to think about before subscribing to the public issue.
A company comes under the purview of 3 financial regulators, which are RBI, SEBI, and IRDA. If any unfavorable move by any of the regulators can act as a barrier to revenue growth, there can be a material impact on the valuation. A delay in execution in any business segment can negatively impact the valuation as the best-case scenario is already priced in,” explained the brokerage.
Marwadi Financial Services also highlighted two risks – if the company is unable to retain the consumers, attract new consumers and expand the volume of transactions from consumers, its business, revenue, profitability, and growth may be harmed. Also, failure to maintain or improve the technology infrastructure could harm the business and prospects.
“Extremely competitive markets with continuously evolving technology, and dependency on payment services for majority of revenue are two key risks,” said ICICI Direct.
