New Delhi: Digital payments and financial services firm Paytm has filed a draft red herring prospectus for its proposed Rs 16,600 crore-initial public offering (IPO) with the Securities and Exchange Board of India.
According to the document, the company plans to raise Rs 8,300 crore through fresh equity and another Rs 8,300 crore through offer-for-sale.
Paytm founder, managing director and chief executive officer Vijay Shekhar Sharma and Alibaba group firms will dilute some of their stake in the proposed offer-for-sale. Alibaba group firm Antfin (Netherlands) Holding BV will be selling at least 5 per cent stake to bring its shareholding below 25 per cent in Paytm to comply with regulatory requirements, according to a source.
According to the document, investors selling stake include Antfin (Netherlands) Holding BV (which has a 29.6 per cent stake), Alibaba.Com Singapore E-Commerce Private Ltd (7.2 per cent) and Elevation Capital V FII Holdings Ltd (0.7 per cent).
Moreover, Elevation Capital V Ltd (which has a 0.6 per cent stake), SAIF III Mauritius Company Ltd (12.1 per cent), SAIF Partners India IV Ltd (5.1 per cent), SVF Panther (Cayman) Ltd (1.3 per cent) and BH International Holdings (2.8 per cent) will also sell stake.
The document did not disclose the quantum of equity that the founder and shareholders will be selling during the issue. The company has proposed to use Rs 4,300 crore for growing and strengthening Paytm ecosystem, including through acquisition of consumers and merchants and providing them with greater access to technology and financial services.
Paytm plans to earmark Rs 2,000 crore for business initiatives, acquisitions and strategic partnerships and up to 25 per cent of the total fund raised through the IPO for general corporate purposes.
The draft red herring prospectus (DRHP) does not disclose share price and percentage of stake to be diluted by any of the shareholders in the company. “The final price at which equity shares will be allotted to ASBA Bidders in terms of the red herring prospectus and the prospectus. Equity shares will be allotted to anchor investors at the anchor investor offer price, which will be decided by our Board or the IPO Committee, as applicable, in consultation with the JGC-BRLMs and the BRLMs, in terms of the red herring prospectus and the prospectus,” the DRHP said. ASBA stands for Application Supported by Blocked Amount.
The offer price will be decided by Paytm board or the IPO committee and the Investor selling shareholders, in consultation with the joint global coordinators and book running lead managers (JGC-BRLMs) and the BRLMs, on the pricing date in accordance with the book building process and the red herring prospectus. BRLMs stands for Book Running Lead Managers.
According to the document, Paytm’s merchant base grew to 2.11 crore as on March 31, 2021 from 1.12 crore in March 2019, and gross merchandise value almost doubled to over Rs 4 lakh crore in the financial year (FY) from Rs 2.29 lakh crore in FY 2019.
The company has reported a narrowing of loss to Rs 1,704 crore in FY’21, from Rs 2,943.3 crore in FY’20 and Rs 4,235.5 crore in FY’19. The total income of Paytm declined to Rs 3,186.8 crore in FY’21, from Rs 3,540.7 crore in FY’20.
Paytm has reported negative cash flow of Rs 222.1 crore in FY’21 primarily due to operating losses and on account of additional working capital requirement.