Today we are going to discuss about the upcoming biggest IPO of India which is none other than Paytm Company. Some days ago many media houses reported that SEBI which is the regulatory board of Stock market has been allowed paytm to enter in the stock market listed company.
Paytm is one of the biggest Fintech start up from India. It has millions of customers using their app daily. After the demonetization this company grew exponentially. But it has lost some of their glory when UPI was created by NPCI. Then PhonePe and Google Pay take the biggest chunk of money transactions.
But still now in P2M transactions, there are no competition of Paytm. At the same time, founders tried to build this as a super app where everything can be done from shopping, booking, gaming and investing at the same platform. Though they are still a loss making company but there is also a high probability that they will disrupt the fintech and banking systems in India.
It can be noted that around a months ago Paytm has submitted DRHP (Draft Red Herring Prospectus) to SEBI. After that some controversies also arised that paytm reportedly sold out their share with some unknown people but at last SEBI gives their permission to Paytm parent company to collect around 16,000 crore rupees in their IPO.
We know that Paytm is actually owned by its parent company named One97 Communications. Through this IPO they planned to raise 2.2 billion dollar which will eventually become biggest IPO in India. But it does not mean that the valuation of Paytm will be that 2.2 billion dollar, it will be much bigger than this as they are not liquidating their entire share.
In between this 16 k crore rupees they will arrange fresh stock of 8,500 crore and other stocks will be shared by present stockholders of this company. It means they will utilize 8500 crore rupees to expand their business and rest will be decided by the owner of the stocks.
The entire IPO share will not be available for retail investors rather there will be booking of 75 % for the Qualified Institutional Investors and 15 % will be reserved for Non Institutional Investors and rest of 10 % will be for retail investors like you and me.
It is expected by the market that after the IPO, the valuation of Paytm will be around 1,65,000 crore rupees which was around 1,20,000 crore rupees two years ago. It was worthy noticing that Chinese Fintech Giant Ant Group which have the highest stock percent in the company are diluting their stakes. At the same time other stakeholders like Softbank, Elevation Capital and offcourse Paytm Founder Vijay Shekar Sharma also diluting some of their stakes.
There is some story behind this why Ant group is diluting their stakes. When the India- China tension arises there have been many backlashed by the customers about the biggest stakeholder of the Chinese Alibaba group. After these tensions, Paytm reportedly replaced all the Chinese officials from the board and included people from USA and India.
Paytm is planning for new business initiatives, acquisitions and strategic partnerships with other companies with the money it is getting from the market. Rest of money will be used for corporate purposes.
In the conclusion we can say that paytm is now a loss making company and will be for upcoming some years. So if you want to invest in this particular company you have to judge every risky upside down as anything can happen with these type of start ups as the fintech world change very rapidly.