More demand: Paytm hikes IPO size to 18,000 crore

MUMBAI: With weeks to go for its initial public offering (IPO), Paytm has hiked its issue size to Rs 18,300 crore from the originally planned Rs 16,600 crore .


The increased portion will all come in the offer-for-sale (OFS) component with existing shareholders selling more of their shares.

The size of the primary offering will remain unchanged at Rs 8,300 crore, while the secondary sale size will now be Rs 10,000 crore.

The biggest IPO in the history of Indian capital markets so far has been that of Coal India (CIL), which raised Rs 15,475 crore in 2010.

The Paytm issue, expected to hit the market next month, will see the shares of One 97 Communications (Paytm's parent company) being listed both on the Bombay Stock Exchange and the National Stock Exchange.

Even before the increase in size, Paytm's offering was the largest in India. According to sources, Paytm has decided to hike the issue size after receiving feedback that there is enough of an appetite for the company's shares at the right price.

Nearly half of the offer for sale is by Ant Financial and the remaining by Alibaba, Elevation Capital,

SoftBank

and other existing shareholders. Investment bankers are understood to have advised the company to offer the shares in a price band to enable price discovery.

The company has said that it has turned contribution margin-positive. The contribution margin gives an indication of the profits made by the company from each product or service after deducting the variable component of the company's cost. This improved from a loss of Rs 1,998 crore in FY19 to a profit of Rs 362 crore in FY21.

Food delivery platform Zomato is currently valued at Rs 1,06,302 lakh crore. Based on its proposed IPO, Paytm's valuation has been speculated at around $20 billion, or Rs 1.5 lakh crore.

Paytm is positioning itself as a multi-platform payments service provider through e-wallets, the

Unified Payments Interface

(UPI) platform, postpaid, credit cards, point-of-sales terminals and all-in-one QR codes. Earlier this year, BillDesk, which processes payments for e-commerce transactions, was purchased by

Prosus

for $4.7 billion.

In its offer document, Paytm has, quoting

RedSeer

, said that it has a 40% share of the customer-to-merchant mobile payments market. In terms of customer-to-merchant e-wallet transactions, its share is even higher at 65-70%. Paytm Payments Bank, a joint venture between Vijay Shekhar Sharma and One 97 Communications, has issued approximately 90 lakh FASTags, with a market share of 28%.


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