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Paytm’s Rs 18300 cr IPO 1.89 times oversubscribed
Photo Credit: VCCircle

The Initial public offering (IPO) of One 97 Communication Ltd, which runs Paytm payments service, was oversubscribed 1.89 times on the final and third day of subscription that closed today. The company is likely to make its stock markets debut on 18 November.

The public issue of Paytm, the largest in India so far, aims to raise Rs 18,300 crore at a band of Rs 2,080-2,150, valuing the company at Rs 1.39 trillion at the top end.

Data from the exchanges data show that the qualified institutional buyer segment was oversubscribed 2.79 times while the retail book worth around Rs 1,830 crore, was subscribed 1.66 times at the end of closing. Overall, investors bid for 9.14 crore shares for 4.83 crore shares available.

“We are overwhelmed with the outstanding response to the Paytm IPO shown by institutional investors, financial giants, mutual funds and of course, retail investors. At Paytm, our ethos has always been to offer technology and financial services that can give power to citizens to improve their lives, help merchants grow their businesses, and impact our communities in positive ways. We hope to continue to strive and drive financial inclusion for the underserved and unserved population of the country,” said an official spokesperson of Paytm. 

Canadian pension fund CPPIB doubled down on its bet on the Noida-based company, with a bid of around Rs 1,280 crore.  The fund had also taken part in the IPO’s anchor book allotment a day before the issue opened to broader investors. Last week, Paytm raised Rs 8,235 crore from anchor investors, with the anchor round oversubscribed 10 times. 

The issue is a combination of fresh and offer for sale. Of the net proceeds from the fresh issue, Rs 4,300 crore will be used for growing and strengthening the Paytm ecosystem, including the acquisition and retention of consumers and merchants. Out of the total, Rs 2,000 crore will be utilized for investing in new business initiatives, acquisitions, and strategic partnerships. In addition, residual funds will be used for general corporate purposes.

Paytm is India’s largest digital ecosystem for consumers and merchants, with a gross merchandise value (GMV) of Rs 4 trillion in FY21. GMV, or the total value of merchandise sold over a period, measures the use of the site to sell merchandise owned by others.  As of 30 June, Paytm offers payment services, commerce and cloud services, and financial services to 333 million consumers and 22 million merchants registered with it.

Paytm derives most of its revenue from transaction fees that they collect from merchants for payment services. Paytm had negative cash flows from operating activities for FY19, FY20 and FY21, primarily due to operating losses and on account of additional working capital requirements.

Paytm, which started off as bill payments and mobile recharge platform in 2010, gradually created a payments-led ‘super app’ and evolved into a comprehensive payments ecosystem, covering payments, credit, insurance, merchants, wealth management, e-commerce services, among others.

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