InvestorQ : Can you share with me details of the Paytm IPO?
Rutuja Nigam made post

Can you share with me details of the Paytm IPO?

1 year ago

One 97 Communications, which owns the Paytm Platform, has filed the draft red herring prospectus (DRHP) for the biggest ever IPO in India worth Rs.16,600 crore. While Rs.8,300 crore will be the fresh funds raised, a similar amount will also be offered as offer for sale to give partial exit to current shareholders including Softbank, Ant Financial, Berkshire Hathaway and Vijay Shekhar Sharma.

While the final valuations are awaited, it is estimated that Paytm would target post issue valuations of close to $25-$30 billion. This is a sharp spike in valuation because Paytm was valued at $16 billion in its last fund raising in November 2019. Considering the size of the IPO, it is likely to be launched before the end of the current year. Clearly, Paytm appears to have been enthused after the success of the Zomato IPO, which subscribed 35 times.

Like most ecommerce companies, Paytm is loss making, but has narrowed its losses sharply in the FY21 year to Rs.1,701 crore. This is largely attributed to its marketing costs falling by one-sixth to Rs.533 crore in FY21. Out of the Rs.8,300 crore to be raised as fresh issue, Paytm will use Rs.4,300 cro0re to grow and strengthen the Paytm ecosystem and Rs.2,000 crore for business related inorganic acquisitions.

Paytm is a great online and mobile digital property. Here is why. Paytm’s mobile app has an installed base of over 35 crore, which is nearly 30% of the Indian population. Paytm is also used by over 2.20 crore online and offline merchants. It is this spread, reach and the control over the payments ecosystem that is making this company powerful.