Bengaluru | Mumbai: Paytm’s board on Friday approved a resolution for its proposed initial public offering (IPO) before November, multiple sources aware of the matter said. The company is aiming to file a draft red herring prospectus (DRHP) with the markets regulator, the Securities and Exchange Board of India (Sebi), by July, the sources said.
The Noida-based company is also evaluating a secondary share sale that could cut stakes of existing investors before the IPO, they said.
The details are not final but could possibly include its largest investors like China’s Alibaba Group, Japan’s SoftBank and venture capital firm Elevation Capital, formerly known as SAIF Partners. According to a source, the transaction could be pro rata, where all major investors could forgo a part of their stakes proportionally.
Paytm, according to a report by news wire Bloomberg, is aiming at a valuation of $25-$30 billion.
Sources said a leading banker has valued Paytm at around $20 billion, higher than its current valuation of $16 billion.
“The company is aiming for a ‘significantly’ higher valuation than its current valuation,” one of the people said.
Along with Morgan Stanley and JP Morgan, Paytm is planning to bring on board Axis Capital, ICICI Securities and SBI Capital to accelerate its compliance timelines.
A spokesperson for Paytm declined to comment.
“They (Paytm) want to put 10% of shares on the block, which would be around $3 billion – ballpark, not exactly but in this region,” one person directly aware of the plan said.
Paytm has so far raised $2.8 billion.
“So, the company will evaluate if it has to make a secondary transaction and will offer it on a pro-rata basis to each of its investors. It is working out the contours, but in the last five years, none of its ‘significant’ shareholders have expressed intent to exit,” the person added.
Core business growth
Paytm’s core payments business is growing, and it is also expanding in financial services. Verticals like online ticketing for travel and movies have, however, taken a hit due to the pandemic.
The payments company is expected to make losses for an eighth consecutive fiscal year in FY21, though the losses are expected to narrow from the previous financial year. Revenue is also likely to take a hit.
Audited numbers for the financial year 2021 have not yet been made public.
Source – EconomicTimes