Paytm to raise about Rs 8,250 crore from anchor investors

This anchor round will be the largest India has ever seen, say insiders

Global technology funds and big names like Blackrock, Canada Pension Plan Investment Board (CPPIB) and GIC are set to participate in Paytm’s anchor round, ahead of its stock market debut, sources in the know said. 

The company’s anchor round, at $1.1 billion (about Rs 8,250 crore), will be the largest India has ever seen, said one of the people in the know. The anchor round will close on November 3.

Anchor investors or cornerstone investors (as they are called globally) are marquee institutional investors like sovereign wealth funds, mutual funds and pension funds. They are invited to subscribe to shares ahead of the IPO to provide confidence to potential investors.

The benefit for institutional investors applying in anchor quota is that they get guaranteed allotment. Allotment to investors applying in an IPO depends on the number of times the issue gets subscribed.

Anchor investors, however, cannot sell their shares for a period of 30 days from the date of allotment as against IPO investors who are allowed to sell on listing day.

According to sources, Paytm’s anchor round is set to see some mega investors making one of their first investments in India, through their tech-focused funds.

Paytm is set to raise Rs 18,300 crore from the markets through a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore. The price band has been kept in the range of Rs 2080-Rs 2150 and it will open for bid on November 8 and close on November 10. According to reports, the company is aiming for a mid-November listing.

According to the company’s Red Herring Prospectus, Paytm’s user base has risen to 337 million consumers and over 21.8 million merchants, as of June 30, 2021.

Its gross merchandise value increased from Rs 697 billion in the three months ended June 30, 2020, to Rs 1,469 billion in the three months ended June 2021.

At its pre-IPO presentation, bankers confirmed that the enterprise value of Paytm would be in the range of $19.3 billion-$19.9 billion. This makes it the most valued unicorn in the country at around $20 billion when it launches its IPO on November 8.