Paytm IPO sees demand at a valuation of $20-22 billion from foreign investors

Digital payments company Paytm’s initial public offering (IPO), India’s largest-ever, is gathering momentum, according to people familiar with the IPO process.

The digital payments company, which is seeking to raise $2.2 billion, is receiving demand from sovereign wealth funds (SWFs) and foreign institutional investors (FIIs) valuing it about $20-122 billion, the people said on condition of anonymity.

An SWF has offered to buy over $500 million of shares in the IPO, the people said. The company had been expecting a valuation of up to $30 billion, according to previous reports.

Paytm is aiming for a pre-Diwali IPO launch and is awaiting approval from market regulator Securities and Exchange Board of India (SEBI), which is expected this week, the people said.

Paytm declined to comment on a query from Moneycontrol on the IPO valuation and timeline. The company is currently in a so-called silent period during which it is required to make no market-sensitive public comment.

Paytm filed its share sale prospectus in July for a Rs 16,600 crore IPO, with a sale of fresh stock and offer for sale (OFS) by shareholders each worth Rs 8,300 crore. It allows the company to raise Rs 2,000 crore in a pre-IPO round.

The people cited above suggested that the company is yet to decide on the pre-IPO round, which depends on aspects like investor requirements, tax implications, and the lock-in period.

Founder Vijay Shekhar Sharma and other shareholders will sell part of their stock in the offer for sale portion of the IPO. Key investors include Elevation Capital with 17.65 percent, SoftBank at 18.73 percent, Alibaba and its affiliate Ant Group at 38 percent. Sharma holds 15 percent and will cease to be listed as a promoter because Paytm seeks to be a professionally managed company after its listing on the stock exchanges.

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