Thursday, January 20, 2022

Paytm’s IPO to raise an estimated $1.6 billion through fresh issue of shares

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One97 Communications, the parent company of Paytm is gearing up for its blockbuster issue of shares worth 12,000 INR or $1.6 billion, in a long-awaited IPO scheduled for later this year.

Founder Vijay Shekhar Sharma has not been classified as a promoter. This is the first time the company has disclosed how much it is looking to raise. It was unclear if the size of the fundraising would be increased to $3 billion.

Paytm has not mentioned if existing shareholders would be selling their stake in the company as well.

Founder Vijay Sharma has written to the board about the change in his status as a promoter to ensure compliance with the Securities and Exchange Board of India(SEBI).

Doing so ensures the company is not being solely controlled by the founder and is being professionally managed.

A person aware of the matter stated that there are special rights for founders in a startup as its promoter, which gives them control over the company. This change positions the founder as being a mere shareholder. There could be more additions on the board moving ahead.

Here's why Paytm has been removed from Google Play
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Paytm may also consider a pre-IPO funding round. In the event of that happening, the size of the offer would be reduced to the extent of equity shares issued under the pre-IPO placement.

“The founder holds 14.61% of the company’s total paid-up equity share capital on a fully diluted basis and exercises total control over the internal affairs and decision-making process of the company to the extent of his shareholding”. Paytm said in a note.

China’s Ant Group and Alibaba own nearly 38% of One97 Communications while SoftBank owns 18.73% and Elevation Capital has a 17.65% stake.

Paytm aims to go public by November and is expected to file its Draft Red Herring Prospectus with SEBI next month.

It is currently the second-highest valued Indian startup at $16 billion, behind ed-tech startup Byju’s which is valued at $16.5 billion.

In the previous year, One97 Communications consolidated revenue from operations fell 14% to 2802 crore, according to their annual report. Losses fell from 2942 crore to 1701 crore in 2020.

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