Paytm (Representative image)
One97 Communications, the parent company of fintech platform Paytm, has filed its draft documents to raise Rs 16,600 crore via a public offering, the latest among a slew of Internet companies that are listing on the Indian stock exchanges.
While Rs 8,300 crore will be primary share sales, Rs 8,300 crore will be an offer for sale, where existing investors can sell their shares.
According to the draft prospectus, while Rs 4,300 crore of the proceeds will be used for growth including customer and merchant acquisition, Rs 2,000 crore will be used for investing in new business initiatives, acquisitions and strategic partnerships.
This will also be India's biggest public issue so far, a record that was previously held by Coal India, which raised Rs 15,000 crore over a decade ago, underscoring the appetite for new-age Internet companies among institutional investors.
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While Zomato's IPO has opened for subscription on July 13 and is set to list later this month, Mobikwik has also filed its draft documents. Policybazaar and Nykaa too are expected to follow suit, hoping to take advantage of the positive response from institutional investors, overseas funds and the positive momentum in the markets.
Paytm's move to file its Draft Red Herring Prospectus (DRHP) with market regulator Sebi comes days after its shareholders approved its plans to raise Rs 12,000 crore through a fresh issue of shares at an extraordinary general meeting.
Shareholders also gave their nod for Paytm founder and CEO Vijay Shekhar Sharma to be declassified as promoter, as he does not own the requisite 20 percent stake in the firm. Sharma currently owns a 14.61 percent stake in the company. Sharma will continue to be the Chairman, Managing Director and Chief Executive Officer of the company.
Also read: Paytm Money allows applications before IPO opens, begins with Zomato
This is in line with Paytm's plan to become a PMC or a professionally managed company , which requires Sebi's approval. Under this norm, no single entity can own 25 percent or above in the company. The stakeholders on July 12 also approved the changes in the Employee Stock Options Plan besides the adoption of new articles of association.
Paytm had clocked revenue of Rs 3,186 crore for FY 20-21 vs Rs 3,540 crore in the previous year. It narrowed losses to Rs 1,701 crore during the same period from Rs 2,942 crore in the previous year.
Ahead of its initial public offering (IPO) Jing Xiandong of Ant Group has exited One97's board and is being replaced by Douglas Lehman Feagin, as per filings with the registrar of companies (ROC) Moneycontrol accessed. Feagin is the senior vice president of Ant Group and is based out of the US.
Also read: Neeraj Arora rejoins Paytm board ahead of its IPO
The company has also appointed Ash Lilani, managing partner of Saama Capital as an independent director.
Michael Yuen Jen Yao of Alibaba Group Holding and Todd Anthony Combs of Berkshire Hathaway have retired by rotation following the last Annual General Meeting held on June 30.
Apart from the board rejig, the company had also approved the allotment of 5,44,870 equity shares to former and existing employees upon exercise of Employee Stock Options (ESOPs) by them.
One97 was founded by Vijay Shekhar Sharma in 2000. It began its journey as a value added service provider, and evolved over the years to become a online mobile payments firm.
The company spent almost a decade catering to the VAS market. It made its first pivot with the launch of a mobile recharge platform in 2010. Until then, customers used to pay cash to get their phones recharged by offline retailers. Over 90 percent of Indian telecom users had pre-paid connections in India at the time. Ten years later, the market hasn't changed much.
Interestingly, this is not One97's first attempt to go public. In 2010, the company, which then used to provide value-added services (VAS) for telecom customers, planned to raise Rs 120 crore ($28 million basis a decade old conversion rate) through an IPO. It had to cancel its plan because of market volatility.
Paytm is currently India's second most-valuable Internet company, last valued at $16 billion when it raised a billion dollars in November 2019 led by T Rowe Price, Discovery Capital and D1 Capital.
Besides these investors, the key stakeholders of the company include names like Ant Financial Netherlands, Alibaba Singapore, three funds of Elevation Capital, SoftBank Vision Fund and BH International Holdings.
If Paytm goes public at the $25-30 billion valuation it is targeting, it would surpass ed-tech firm Byju's $16.5 billion, currently the country's most valuable private Internet company. Wal-Mart-owned Flipkart, however, recently saw its valuation jump to $37 billion when it raised $3 billion.
Paytm's gross merchandise value (GMV) stood at Rs 2,29,200 crore in FY19 which grew to Rs 4,03,300 crore in FY21.
The total merchant base of the company has grown from 11.2 million as of March 31,2019 to 21.1 million as of March 31, 2021.
The company which is counting big on the financial services segment also said that during the three consecutive financial years 2019, 2020and 2021, revenue from payment and financial services accounted for 52.5 percent, 58.1 percent and 75.3 percent of the company's revenue from operations, respectively.