paytm: Paytm gets Sebi nod for Rs 16,600 crore IPO

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MUMBAI: Markets regulator Sebi has cleared the Rs 16,600-crore initial public offer of One97 Communications, the parent company of Paytm. This would make the IPO the largest ever in India. The company is understood to be targeting a listing in November.
According to the draft IPO documents filed by the company, One97 Communications plans to raise Rs 8,300 crore through fresh issue of equity shares and another Rs 8,300 crore through the offer for-sale (OFS) route.

The Rs 16,600-crore offer will make Paytm IPO the largest listing after public sector miner Coal India’s Rs 15,990 crore IPO in 2010 and Reliance Power in 2008. Zomato’s Rs 9,375-crore IPO this year was the biggest public offering in more than a decade. The success of Zomato’s IPO has raised hopes for new age companies that are focused more on achieving scale than bottom line. One97 Communications reported a loss of Rs 1,704 crore in FY21, down 42% from the previous fiscal. Existing shareholders, which include the largest stakeholder ANT Group and employees, will be selling a stake in the OFS category. SoftBank, Elevation Capital, SAIF Partners, Berkshire Hathaway and Ratan Tata’s RNT Associates are the other investors that are listed as selling shareholders under the OFS.
The success of the IPO would depend on the support it receives from international investors given the scale of the offering.The company is looking at a valuation of $20-22 billion.
If the company succeeds in getting this valuation, it will be in the same league as Tata Steel or Tata Motors with valuations of around Rs 1.6 lakh crore each. Some bankers estimate that the IPO could result in foreign inflows of over $2 billion.
One97 Communications, which is named after the 197-directory inquiry number used by state-owned telecom operators MTNL and BSNL, was set up as a search service in 2001 by Vijay Shekhar Sharma. It used the Paytm brand as it moved into recharge services.
The company expanded into the digital wallet space and later into QR-based payments. During demonetisation, it rapidly scaled up its business and today has the larger share of merchant payments in terms of the number of merchants. Paytm Payments Bank (PPB), which is promoted by Sharma and One97 Communications, received a licence from the RBI in 2017. PPB has now sought to convert itself into a small finance bank. Besides PPB, the Paytm group includes Paytm Money. Last year, Paytm signed a deal to buy Raheja QBE General Insurance.

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