next week, One97 Communications, parent company of the fintech giant Paytm, will file its draft prospectus by July 12. This would be for an initial public offering (IPO), which is looking to raise around $2.3 billion, according to a Reuters report. New Paytm shares will be sold to raise money and there will also be a secondary offer of sale. Both should come in at a massive valuation of $24 billion to $25 billion. According to Reuters, the prospectus is to be filed on July 12 after the Extraordinary General Meeting (EGM) of shareholders in Delhi.
Paytm will seek the approval of its shareholders at the EGM meeting to sell the new shares at a value of $1.61 billion, with an additional option of maintaining an over-head subscription of 1 percent. The fintech giant has roped in JPMorgan Chase, Morgan Stanley, ICICI Securities, Goldman Sachs, HDFC, Citi and Axis for the IPO, according to Reuters.
The company’s move to IPO is historic, the biggest ever IPO in Indian history. Apart from going public, the company will also give an option to its employees to sell the company’s shares through an ‘Offer of Sale’ (OFS), which was circulated among the employees before its market launch.
Paytm’s move into the big league: Reason for success
The huge success of Paytm and the importance of such IPOs is due to the business strategy that the company has maintained over the years. Its multi-stacked approach that included multiple locations of operations ensured a steady and impressive revenue stream. This was reflected in the company’s annual financial report, which indicated that the company had achieved revenue of Rs 3,186.60 crore for FY21.
Thanks to the pandemic and the ensuing spike in usage of payment gateways and other ancillary services like Paytm Wallet, Paytm UPI and Paytm Bank Account, business boomed in a year where most businesses were hit hard. The fintech company cut its losses by 42 per cent to Rs 1,701 crore in the next financial year from Rs 2,942.36 crore in FY10 to Rs 1,701 crore by FY11. Paytm has almost halved its losses in a span of one financial year. The company was valued at $16 billion at the last valuation in 2019 following fund-raising by SoftBank and Ant Financial.
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