Paytm’s Rs18,300 cr IPO gets 1.89 times oversubscription

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

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

Exchanges data showed, qualified institutional buyer segment was oversubscribed 2.79 times while retail book worth around 1,830 crore, was subscribed 1.66 times at the end of final day. 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 Paytm’s official spokesperson.

According to a Mint report, Canadian pension fund CPPIB, doubled down on its bet on the Noida-based company, with a bid of around 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 had raised 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, 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, 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 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, 2021 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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