India’s second most valuable startup Paytm of $16 billion, is going to open one of the biggest Indian IPOs. The company is expecting to raise Rs 16,600 crore from this IPO as per the draft prospectus filed by it with the Securities and Exchange Board of India (SEBI), which is the capital markets regulator.
Vijay Shekhar Sharma founded, Paytm told the SEBI that, the IPO will be offering fresh issues and secondary issues or an offer for sale each worth Rs 8,300 crore.
According to the draft red herring prospectus (DRHP), Paytm might adjust the fresh issue, if it organizes pre-IPO funding round, which can help it raise to Rs 2,000 crore.
For this biggest Indian IPO, the most significant investors of Paytm including Chinese fintech giant, Ant Group, SoftBank, Alibaba, Elevation Capital, and even Vijay Shekhar Sharma will relinquish some percentage of the stakes owned by them in the company through OFS, which is expected to raise Rs 8,300.
The Paytm IPO is expected to be one of the Indian stock exchanges’ largest debut after 2008’s Reliance Power and 2010’s Coal India.
In this biggest Indian IPO, Paytm is going to keep only 15% of the issue for non-institutional investors (NICs), and only 10% for retail investors, while the major 75% of the issue will be reserved by the company for the qualified institutional buyers (QIBs).
Before selling the owned shares, investors will have a time of one tear as a lock-in period, according to the filed draft prospectus.
With Ant Group owning 30% of the shares in Paytm, the company is considered a “foreign-owned and controlled” company and that is why it must stay aligned with the foreign investment laws of India.
To comply with the norms of SEBI and being considered as a professionally managed company, Paytm would have to bring down the Ant Group’s owned shares from 30% to less than 25%, which will result in the reduction of its influence over the company.
Warren Buffet and Ratan Tata are also expected to reduce their shares in Paytm for this biggest Indian IPO.