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Digital payments and financial services firm Paytm wants to hit the market with its Rs 16,600 crore IPO at the earliest and very likely by October, sources said on Monday.

The company had filed draft papers for its initial share sale with the market regulator SEBI on July 15. It expects a response from the capital market watchdog by mid-September, after which it plans to proceed with listing as early as possible.

“It is assumed that SEBI takes two months to revert on the draft red herring prospectus. The company is looking forward to it. Once the documents are received, Paytm will file for IPO.

“The process is dependent on regulatory approvals. If it goes as per expected timelines, then the IPO should be in place by October,” a source tracking the development closely told PTI.

An email query sent to Paytm did not elicit any response.

According to the draft document, the company plans to raise Rs 8,300 crore through fresh equity issuance and another Rs 8,300 crore through an offer-for-sale.

Paytm founder, Managing Director and Chief Executive Officer Vijay Shekhar Sharma and Alibaba group firms will dilute some of their stake in the proposed offer-for-sale.

Alibaba group firm Antfin (Netherlands) Holding BV will be selling at least 5 percent stake to bring its shareholding below 25 percent to comply with regulatory requirements, as per another source.

According to the document, investors selling stake include Antfin (Netherlands) Holding BV (which has 29.6 percent stake), Alibaba.Com Singapore E-Commerce Private Ltd (7.2 percent) and Elevation Capital V FII Holdings Ltd (0.7 percent).

Moreover, Elevation Capital V Ltd (which has 0.6 percent stake), SAIF III Mauritius Company Ltd (12.1 percent), SAIF Partners India IV Ltd (5.1 percent), SVF Panther (Cayman) Ltd (1.3 percent) and BH International Holdings (2.8 percent) will also sell stake.

The company has proposed to use Rs 4,300 crore for growing and strengthening the Paytm ecosystem, including through acquisition of consumers and merchants and providing them with greater access to technology and financial services.

Paytm plans to earmark Rs 2,000 crore for business initiatives, acquisitions and strategic partnerships and up to 25 percent of the total fund raised through the IPO for general corporate purposes.

According to the document, Paytm’s merchant base grew to 2.11 crore as on March 31, 2021 from 1.12 crore in March 2019, and gross merchandise value almost doubled to over Rs 4 lakh crore in the financial year from Rs 2.29 lakh crore in FY 2019.

The company has reported a narrowing of loss to Rs 1,704 crore in FY’21, from Rs 2,943.3 crore in FY’20 and Rs 4,235.5 crore in FY’19.

The total income declined to Rs 3,186.8 crore in FY’21, from Rs 3,540.7 crore in FY’20.

Paytm has reported negative cash flow of Rs 222.1 crore in FY’21 primarily due to operating losses and on account of additional working capital requirement.