Digital payments and financial services firm Paytm is planning to go public. It is to be one of the country’s largest initial public offerings (IPO). Paytm to raise around $3-billion IPO (around Rs 21,745 crore) through an initial public offer during the October-December quarter, and the company is targeting a valuation of over $25 billion.
Earlier, the largest IPO that India has seen was Coal India’s Rs 15,475 crore issue, which was listed in November 2010. And before that Reliance Power Ltd listed on the exchanges in February 2008, with an issue size of Rs 11,700 crore.
Paytm is the largest digital transaction platform in India and claims to be around 30-50 per cent larger than other mobile apps in the segment with over 1.4 billion monthly transactions.
Paytm shareholders include Ant Group with 29.71 per cent, Softbank Vision Fund with 19.63 per cent, Saif Partners with 18.56 per cent, Vijay Shekhar Sharma with 14.67 per cent. AGH Holding, Berkshire Hathaway, T Rowe Price and Discovery Capital hold less than a 10 per cent stake in the company.
Start-up Ecosystem in India
Today, the Indian startup ecosystem is home to around 38 thousand active startups which is inclusive of both bootstrapped and funded startups. As the launch of new startups pushes entrepreneurship forward, India is also home to over 5 thousand active investors.
This can be best determined from the fact that so far in 2021, nine Indian startups have touched over $1 billion valuations as compared to the six-year annual average from 2015 to 2020 of six unicorns. At this speed, India is expected to see 100 unicorns by 2023, much earlier than the earlier projection of 2025. And further, these startups can be seen listed on exchanges too via an initial public offering.
What Is an Initial Public Offering?
An initial public offering (IPO) refers to the process of offering shares of a private company to the Retail, High Networth Individuals (HNIs) and Institutional Investors in a new stock issuance and getting its name listed on the stock exchange. The IPO market is described as a primary market where firms look to access long-term capital.
LIC could be next largest IPO in India
One of the most awaited IPO of the year is LIC’s IPO. Finance Minister Nirmala Sitharaman in Union Budget 2021 had announced that the Life Insurance Corporation of India (LIC) IPO would be completed in 2021. Issue size of LIC would be around Rs 70,000-80,000 cores. This could be the largest IPO in the history of an Initial Public Offering in India.
Upcoming IPOs in 2021
In 2020 around 15 companies went public and more than Rs 25,000 crores were raised from the IPOs. IPOs like Burger King, Mazagon Dock Shipbuilders, Happiest Minds, Chemcon Specialty and Mrs Bectors subscribed more than 149 times.
Some reports suggested that in 2021, 30 companies are planning to raise more than Rs 30,000 crores from the markets.
Companies expected to go public in 2021 are LIC, Nyka, Fincare small finance Bank, Zomato, Nuvuco vistas, Bajaj Energy, Indian Pesticides, Studds Accessories, Apeejay Surrendra Park Hotels, Shyam Steel and Annai Infra Developers.