Highlights of Biggest IPO: RBI, SEBI, Irdai also Investigated on Paytm

The country's biggest IPO is about to come. Paytm submitted the draft to SEBI on Friday for this. The company will raise Rs 16,600 crore.
Image Credit: The Financial Express
Image Credit: The Financial Express

The country's biggest IPO is about to come. Paytm submitted the draft to SEBI on Friday for this. The company will raise Rs 16,600 crore. Earlier, 15,200 crores were raised by Coal India in 2010. We are telling about the investment in Paytm's IPO, how is the company and what are the allegations on it.

Difficult to make a tag last for long

However, the tag of the biggest IPO is not going to last very long. In this year, the country's largest insurance company LIC is coming with an IPO, which will be a record till now. That is, LIC is going to raise 90 thousand crores which will be difficult to break for years.

Draft submitted to SEBI

All this information has been given in the draft which has been submitted to SEBI. According to this, the company will raise 8,300 crores from new shares. The remaining 8,300 crores will be sold under the offer for sale. In this, China's Ant Group will sell its shares. Ant Group holds a 30% stake in the company. The company is planning to raise Rs 2,000 crore before the IPO.

When will the company's IPO open and what will be the price

The company's IPO will open after getting the approval of SEBI and its price will be decided at the same time. It is expected to arrive during Diwali.

What will be the valuation of the Company

The valuation of the company after the IPO will be estimated between Rs 1.80 lakh crore and Rs 2.20 lakh crore. At present, its valuation is close to Rs 1.18 lakh crore. It is the second-highest valuation Indian startup.

Company business

The company has been consistently making losses. It has said in the draft that it cannot guarantee that it will make profits going forward. That is, it can give losses even further. It has been a net loss for the last three years. There has been a loss of Rs 2,943 crore in FY 2020 and Rs 1,704 crore in 2021.

How much will be the share for retail investors?

Retail will have only a 10% stake in this IPO. The share will be 75% for Qualified Institutional Buyers (QIBs) and 15% for High Net Worth Individuals (HNIs). Anchor investors may have 60% of the QIBs.

Paytm works as a foreign company

It has been said that at present its control is in the hands of the foreign company. It will continue to be in their hands even in the future because it is so under FDI rules.

Tata and Buffett will also sell stake

Ratan Tata has 75,000 shares in Paytm. He has taken this share through RNT Associates. They will sell some of this stake. Warren Buffett also has 1.7 crore shares. They will also sell their shares through it. He has acquired these shares through Hathway Holding.

Who has a stake

Ant Group holds 30.33%, Japan's Soft Bank 18.73%, Elevation Capital 17.65%, Alibaba 7.32%, Vijay Shekhar Sharma 14.97% and others 11%.

Initial Public Offering, Image Source: SSL Invest
Initial Public Offering, Image Source: SSL Invest

SEBI's observation

Paytm has said that there have been several violations in the uploading of KYC (Know Your Customer) data of customers on Paytm Money and providing investment advice. SEBI has made such an observation. SEBI has given a written warning to the company. SEBI had issued new guidelines regarding the advisory business, after which its advisory business was also suspended in March 2021.

Reserve Bank action

The Reserve Bank has raised the question under the Foreign Exchange Management Act (FEMA). This process is still ongoing. The Reserve Bank issued the rules under the Financial Action Task Force (FATF) in June this year. It is used globally for money laundering and terrorist funding. Therefore, in the future, there may be a roadblock for investment through New Umbrella Entity (NUE).

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