One97 Communications Ltd, the parent of Paytm, is expected to raise $1.1 billion from anchor investors as a part of its $2.4 billion initial public offering, said three people aware of discussions.
Participating investors include BlackRock Inc., Canada Pension Plan Investment Board and GIC Pte along with other sovereign wealth funds, one of the persons quoted above said on the condition of anonymity.
Mint had earlier reported on October 7 that Singapore’s GIC and BlackRock were in talks with Paytm to participate in the anchor round.
Other investors in talks with Paytm included state-backed wealth investor Abu Dhabi Investment Authority, Mint had reported earlier.
“The company’s anchor round is expected to be closed on November 3. Some other established investors are expected to make their first investment in India by participating in Paytm’s public offering. The investment will be made through their tech focussed funds,” said a second person requesting anonymity.
Paytm had increased its issue size to Rs 18,300 crore (roughly $2.4 billion) from Rs 16,600 crore (roughly $2.2 billion) earlier this month.
The issue will include sale of new shares worth ₹8,300 crore, with existing investors selling another ₹10,000 crore worth of shares as a part of the increased IPO size. Roughly half of the offer for sale (almost Rs 5000 crore) by existing shareholders will be by Paytm’s biggest investor Ant Financial, which currently owns 29.6% of the company.
The price band set by the company has been kept in the range of ₹2080- ₹2150 and it will open for bid on November 8 and will close on November 10.
“There are a number of investors who want to subscribe to our entire anchor portion [...] We have money in the bank and are getting more customers and merchants at lower costs. We are positive that we will attract long term shareholders and investors who will understand that the real value in Paytm is not about quarter-on-quarter profit delivery but on the long term change it brings,” said Vijay Shekhar Sharma, founder, chairman and managing director, One97 Communications Ltd., in an interview with Mint on October 29.
The news around Paytm’s increased IPO size comes at a time when the company has decided not to go ahead with its ₹2,000 crore pre-IPO fundraise, to meet its earlier timelines of going ahead with a public issue around the Diwali festival.
India’s market for first-time share sales is surging on debuts of tech firms like Zomato Ltd.’s $1.3 billion offering. Among the startup public issues, beauty marketplace Nykaa’s IPO opened on October 28, and financial marketplace PB Fintech Ltd.’s public issue opened on November 1.
Nykaa's IPO on the first day was subscribed 1.55 times. On day 2 of the offer, the initial share-sale of FSN E-Commerce Ventures Ltd was subscribed 4.82 times.
The company plans to use ₹4,300 crore of the fresh issue to grow its existing business lines and acquire new merchants and customers. The company at present has no plans to invest in international expansion as of yet.
“So international is something we will be focussing on, once we feel the India market is matured enough. We have India’s market to take care of. India will continue to be first for us always,” said Sharma to Mint.
Led by founder Sharma, Paytm has expanded beyond digital payments into banking, credit cards, financial services and wealth management. It also supports India’s financial payments backbone, the Unified Payments Interface or UPI.