Next week, One97 Communications, the parent company of fintech giant Paytm, will be filing its draft prospectus by July 12. This will be for an initial public offering (IPO) that is looking to raise around $2.3 billion, according to a report by Reuters. New Paytm stocks will be sold off in order to raise money and there will also be a secondary offering of sales. Both of which, should come up to a massive valuation of $24 billion to $25 billion. The prospectus is due to be filed on July 12 after the extraordinary general meeting (EGM) of shareholders that is set to take place in Delhi, according to Reuters.
Paytm will be seeking the approval of its shareholders at the EGM meeting so as to get clearance to sell off new stocks at a value of $1.61 billion with an added option to retain an over-head subscription of 1 per cent Reuters reported. The fintech giant has hired the services of JP Morgan Chase, Morgan Stanley, ICICI securities, Goldman Sachs, HDFC, Citi, and Axis for the IPO according to Reuters.
The company’s move to IPO is a historical one, being one of the biggest in Indian history to date. In addition to going public, the company will also be giving its employees an option to sell company shares via the ‘offer of sale’ (OFS) that was circulated amongst the staff ahead of the market debut.
Paytm’s Move to the Big Leagues: The Reason For Success
Paytm’s huge success and the significance of such an IPO is due in part to the business strategy that the company has maintained over the years. Its multi-stacked approach which included several venues of operation made sure of a steady and impressive revenue stream. This was reflected in the company’s annual financial report, which indicated that the company had achieved a revenue of Rs 3,186.60 crore for FY21.
Thanks to the pandemic and the ensuing spike in the use of the payment gateway and other subsidiary services like Paytm Wallet, Paytm UPI and Paytm Bank Account, the business boomed in a year where most businesses were hit hard. The fintech company curbed its losses by 42 per cent by FY21 by bringing the losses from Rs 2,942.36 crore in FY20 to Rs 1,701 crore in the next financial year. Paytm has almost halved its losses in the span of one financial year. The previous valuation in 2019 had the company valued at $16 billion after funds were raised by Softbank and Ant Financial.
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