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Wednesday, December 01, 2021

Paytm IPO opens today: Here’s everything you need to know

Paytm IPO, Paytm IPO Price Band Details: The Rs 18,300 crore initial public offering (IPO) of One97 Communications, the parent entity of digital payments firm Paytm, will be available from November 8-10, 2021. It has a price band of Rs 2,080-2,150 per share.

By: Express Web Desk | New Delhi |
Updated: November 8, 2021 11:48:06 am
paytm ipo, paytm ipo price, paytm ipo gmp, paytm ipo sizeA smartphone with the Paytm logo is placed on a laptop in this illustration taken on July 14, 2021. (REUTERS/Illustration/File Photo)

Paytm IPO: The initial public offering (IPO) of One97 Communications, the parent entity of digital payments firm Paytm, has opened for subscription on Monday, November 8, 2021, at a price band of Rs 2,080-2,150 per share. The offer will be available till Wednesday, November 10, 2021.

Through the offer, One97 Communications aims to raise a whopping Rs 18,300 crore, making it the largest-ever IPO in India surpassing the IPO of state-run Coal India which raised over Rs 15,000 crore in 2010.

Key things to know about Paytm IPO

The Paytm IPO comprises a fresh issue of equity shares worth Rs 8,300 crore and an offer for sale (OFS) worth Rs 10,000 crore by existing shareholders including its founder Vijay Shekhar Sharma along with Ant Financials, Alibaba, Elevation Capital, and SAIF III Mauritius Company, Saif Partners.

The Paytm IPO has got 75 per cent reserved for qualified institutional buyers (QIBs) and 15 per cent reserved for non-institutional investors (NIIs). The remaining 10 per cent of the issue is available for retail investors.

The proceeds from the fresh issue will be used towards (1) Growing and strengthening our Paytm ecosystem, including through acquisition of consumers and merchants and providing them with greater access to technology and financial services, (2) Investing in new business initiatives, acquisitions and strategic partnerships and, (3) For general corporate purposes, according to the information in the red herring prospectus (RHP).

Investors who wish to subscribe to Paytm IPO can bid in a lot of six equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 12,900 to get a single lot of One 97 Communications. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).

The applicants also must note that the cut-off time for UPI mandate confirmation is Thursday, November 11, 2021, upto 12:00 pm. If they fail to do so then their application may not be considered.

Morgan Stanley India Company, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, J.P. Morgan India, Citigroup Global Markets India and HDFC Bank are the book running lead managers to the IPO. Link Intime India is the registrar of the issue.

Before heading into the IPO, last week Paytm had raised Rs 8,235 crore (45 per cent of the total issue size) from 122 anchor investors in lieu of 38,302,326 equity shares at Rs 2,150 each.

The anchor investor round saw participation from likes of Blackrock Global Funds, Canada Pension Plan Investment Board, Aditya Birla Sun Life Trustee, Government of Singapore, Vanguard, Schroder International Selection Fund, Sands Capital Funds, Mirae Asset, Marshall Wace Investment Strategies, Fidelity, UBS, Janus Henderson, Nomura India Investment Fund, HDFC Mutual Fund, Morgan Stanley Asia (Singapore), Goldman Sachs (Singapore), among others.

The research team at IIFL Securities in their IPO note has recommended a “Subscribe” to the offer.

IIFL Research in its IPO report said, “At a higher price band of Rs 2,150, the company is demanding a Price to sales multiple of 49.73x and an EV/sales multiple of 48.85x on FY21E. When compared to an international peer PayPal which has a Price to sales ratio and a EV/sales of 11.98x and 12.42x respectively, the valuations look expensive. However, considering the huge scalability of the platform business, sharp reduction in EBITDA loss and Net loss, focus on innovation, a trusted brand with a wide reach, company getting benefit of networks effect, Contribution margin increasing from (61.8)% in FY19 to 27.4% in 1QFY22, we recommend Subscribe to the issue with a long-term perspective.”

The share allotment is likely to take place on Monday, November 15, 2021, and the shares are expected to be listed on Thursday, November 18, 2021, according to the timeline given in the RHP.

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