IPO-bound Paytm allots Rs 8.2k-cr worth shares to anchor investors

Leading digital payments and financial services platform Paytm allotted Rs 8,235 crore worth of shares to anchor investors as part of its Rs 18,300-crore initial public offering (IPO), which opens on Monday. This is the largest-ever allotment made in the anchor category.

The anchor round was subscribed 10 times by 74 investors, according to sources. Paytm’s top eight anchor investors have invested more than any fund has ever done in an Indian IPO anchor round.

BlackRock (Rs 1,045 crore), Canada Pension Plan Investment Board (Rs 938 crore), Birla MF (Rs 555 crore), and GIC (Rs 533 crore) were the biggest investors in the round. With this, Paytm has already secured 45 per cent of its total IPO issue size.

The IPO, which will be the largest ever in India, comprises a fresh issue of Rs 8,300 crore and a secondary share sale worth Rs 10,000 crore. The price band for the IPO is Rs 2,080-2,150 per share.

The top three global mutual funds - BlackRock, Vanguard, and Fidelity participated in the round. The largest emerging markets dedicated investors like Standard Life Aberdeen, UBS, RWC, too, took part.

On the domestic front, Paytm’s anchor round saw interest from leading mutual funds like HDFC MF, Birla MF, Mirae MF. These domestic mutual funds have invested more in Paytm IPO anchor than any other.

At the top end of the price band, Paytm will be valued at Rs 1.39 trillion, making it 36th most valued listed firm in the country.

According to the company’s Red Herring Prospectus, its total user base increased to 337 million registered consumers and over 21.8 million registered merchants, as of June 30.  Paytm’s gross merchandise value increased from Rs 69,700 crore in the quarter ended June 30, 2020 (Q1FY21), to Rs 1.47 trillion in Q1FY22.

“Considering the trailing 12-month (June 2021) sales of Rs 3,142 crore on post issue basis, the company is going to list at a market cap-to-sales of 44.36 times,” observes Marwadi Financial Services in a note, adding that these “valuations are demanding for a loss-making company.”