India’s Paytm moves ahead with $3bn IPO plans

Company backed by Berkshire Hathaway, SoftBank and Ant Group, could achieve a valuation of up to $30bn through its listing

A worker adjusts a hoarding of Paytm in India. The company's investors include Berkshire Hathaway, SoftBank Group and Ant Group. Reuters

India’s Paytm is asking employees to decide whether they want to sell shares in the digital payments pioneer’s planned initial public offering, taking another step toward what could be the country’s largest stock market debut ever.

The start-up, formally called One97 Communications, sent the “offer for sale” to its staff on Monday as it prepares to file for the IPO, according to documents reviewed by Bloomberg.

Paytm’s board has approved the offering plans in principle and is finalising a draft prospectus, which could be filed as soon as the first week of July, according to a person familiar with the matter.

One97 Communications “is proposing to undertake an initial public offering of its equity shares, subject to market conditions, regulatory, corporate and other approvals, and other relevant considerations, in accordance with applicable law, and has received an in-principle approval from the board of directors of the company in this regard”, Amit Khera, One97’s secretary, said in the notice to employees and shareholders.

The company, whose investors include Berkshire Hathaway, SoftBank Group and Ant Group, is seeking to raise about 218 billion rupees ($3bn) at a valuation of around $25bn to $30bn, Bloomberg reported in May. Coal India raised more than 150bn rupees in 2010 in the country’s largest IPO so far.

The public market debut will include a mix of new and existing shares to meet regulatory obligations in India. The country’s regulations require that 10 per cent of shares are floated within two years and 25 per cent within five years.

The offer for sale, or OFS, will allow employees to sell their shares as part of the IPO. Although Paytm’s board has given its preliminary backing, formal approval cannot take place until the prospectus is finalised.

If existing shareholders want to sell more in aggregate than allowed during the IPO, the ability to sell stock will be determined on a pro-rata basis, according to the documents.

Morgan Stanley is working with Paytm on the offering. Paytm declined to comment on the listing.

Employees can participate in the IPO by consenting to offer all or part of their equity shares, a decision that would need to be finalised before the filing of the first of the offering documents to the country’s regulator. Equity shares not sold during the offering would be locked-in for a one-year period, the notice said.