Paytm, India’s first digital mobile payment platform, was launched back in 2009 and its parent company, One 97 Communications Ltd, was incorporated in 2000.
It is interesting to note that One 97 Communications revolutionized India’s digital ecosystem for both merchants and consumers.
Did you know? The company has more than a 333 million client base and more than 21 million merchants who registered with them to offer payment, financial & cloud and commerce services.
Through the Paytm App, the company provided consumers with the ability to make cashless payments for services and products. Now, Paytm has become India’s largest payment platform with a brand value of more than USD 6 billion.
With this app, consumers are empowered to make cashless payments at thousands of registered merchant stores across India, top-up mobiles, make online transfers, pay various bills, and more. Consumers can even make various investments, play games online, and access digital banking services.
Apart from these features, Paytm offers merchants a platform on which to advertise their products and services, use online payment solutions, and sell products through Kaymall.
The Paytm IPO, whose bidding started on November 8, 2021, brings a fresh issue of ₹8,300 crores and an Offer for Sale of ₹10,000 crores. Read this article to learn more about the Paytm IPO to make better trading decisions.
Competitive Strengths of Paytm
- India’s first and leading digital payment solutions platform for consumers and merchants
- Huge brand valuation and brand identity of USD 6.3 billion
- Huge consumer base of 333 million out of which 114 million are regular annual transacting users along with 21 million registered merchants
- Paytm super-app will offer better and huge numbers of digital payment services through mobiles
Objectives of the Paytm IPO Issue
With all the funds raised through the IPO, Paytm will use the net proceeds for the following purposes:
- ₹4,300 crores will be utilized to grow and strengthen Paytm’s digital payment ecosystem. This will include acquisition through retention of merchants and consumers, providing them better access to financial services.
- ₹2,000 crores will be used to invest in new initiatives for business, strategic partnerships and acquisitions.
- The rest, ₹12,000 crores, will be used for general corporate processes.
8 Things You Should Know About the Paytm IPO
1. The first and foremost matter is the size of the IPO. This IPO is the biggest in India until now, a whopping ₹18,300 crores. Out of the ₹18,300 crores, ₹8,300 crores will be a fresh issue and the remaining ₹10,000 crores will be OFS (offer for sale) by existing shareholders.
2. Top promoters and investors of Paytm are diluting their shares in the IPO, which makes up the ₹10,000 crores. These investors include Vijay Shekhar Sharma, MD & CEO of Paytm, SoftBank (Japan), Alibaba & Ant Group (China), along with Elevation Capital.
3. Paytm intends to use the funds raised through this IPO for various purposes such as acquisitions of consumers and merchants, strategic partnerships, and offering greater access to financial services and technology. The rest of the funds will be used for various other purposes, as mentioned in the above section.
4. Ahead of Paytm’s listing in India’s stock market, it allocated ₹8,235 crores worth of shares to 100+ institutional investors. These include the government of Singapore.
5. Paytm’s IPO attracted interest from more than 120 institutional investors who bought 38+ million shares at a price of ₹2150 a share. These investors include Canada Pension Plan Investment Board, Abu Dhabi Investment Authority, and BlackRock Global Funds, among others.
6. Paytm was launched around a decade ago for mobile recharging. Since then, Paytm has grown in consumer base, technology and offering financial services. How did it grow? Thanks to Uber, which listed it as a payment option. Additionally, Paytm grew a lot more after the Government of India banned certain currency notes, boosting digital payments.
7. Paytm, among other companies, tapped capital markets in 2021 for raising funds and taking record highs of the stock market into account, which outperformed other Asian peers so far.
8. Paytm’s IPO is the largest IPO in the history of India’s stock market, which broke the record high of Coal India Ltd that raised ₹15,000 crores around 10 years ago.
Paytm’s IPO Subscription Status
India’s largest IPO of ₹18,300 crores was subscribed 1.89 times as of November 10, which was the third and final day of bidding. The IPO received 9.14 crores worth of bids for equity shares against ₹4.83 crores shares on the last day.
The portion of the IPO set aside for just retail investors (individual investors) was subscribed 1.64 times. Along with that, 24% of the portion was set aside for non-institutional investors, and 2.79 times of the portion was set aside for qualified institutional investors.
How Did the Paytm IPO Perform In The Grey Market?
An interesting thing to note is that almost 80% of bidding was from foreign institutional investors, while only 16% was from Indian retail investors. Only 2.5 million shares were bid by the HNIs, which only makes up for 2.77%, while only 0.5% of bidding was from domestic and corporate institutions.
In a press release, Paytm stated that they’re overwhelmed by the excellent response the Paytm IPO received from the financial giants, retail investors and institutional investors.
According to certain market observers, Paytm shares were trading at a premium of only ₹55 in the grey market. This is ₹5 less than the GMP of ₹60 on November 9. The GMP of Paytm IPO has been nose-diving since it became available on Monday. The shares were trading at ₹150 GMP but fell to ₹55 in just one week. Howev