Just after the news about Ant Group looking to sell five percent of stake from Paytm’s parent company, One97 Communications, Paytm now breaks news for raising India’s biggest public issue by filing draft papers for an IPO (initial Public Offering) worth Rs.16,600 crore.

The IPO revenues would be used to improve the Noida-based company's payment ecosystem, as well as new business initiatives and acquisitions.

According to Paytm's draft red herring prospectus (DRHP) or offer document filed with the Securities and Exchange Board of India (SEBI), the IPO will contain an issue of new shares worth Rs.8,300 crore and an offer for sale of Rs.8,300 crore.

The IPO process starts with a draft red herring prospectus (DRHP) or offer document containing information about the company, its promoters, and the initial public offering (IPO), on the basis of which the market regulator SEBI will approve the listing.

Previously, CIO Insider reported that Paytm was considering reducing Ant's stake to 25 percent in order to meet SEBI's standards for listing as a professionally managed company, and this is expected to appear as Paytm's Offer For Sale (OFS).

Ant Group then proposed to sell its interest in Paytm for approximately $800 million, based on the company's current value of $16 billion (around Rs 6,000 crore).

The offer can potentially be structured as a Qualified Institutional Placement (QIP) ahead of the IPO, similar to the food tech site Zomato.

However, as stated by Sebi and the Companies Act, this can be accomplished by reducing all investors' stakes to under 25 percent and diluting some beneficial ownership criteria, according to regulatory experts.

Paytm is also rumored to be contemplating Ant Group and Alibaba as independent investors, despite the fact that they own a combined 38 percent of the company.

According to reports, Paytm will be able to comply with Sebi standards more easily if Ant and Alibaba are treated as independent firms with no shared interests or intentions.

To comply with these laws, one of Paytm's shareholders is thought to have accepted a resolution to declassify founder Vijay Shekhar Sharma as a promoter. Paytm believes that if the firm is run effectively, the IPO process can be hastened, as it decreases the compliance burden on investors and promoters.

The selling of shares by Paytm's significant worldwide shareholders is not expected to be on a pro-rata basis. However, Ant Group is expected to sell all of its shares due to regulatory limits.

Besides, the size of this transaction is said to vary depending on the company's valuation during the public offering and pre-IPO phase. The specifics are still being finalized.

This broke in no sooner than Zomato’s IPO, which opened doors for other Indian firms to go public and Paytm seems to have soared the highest surpassing that of Coal India’s IPO which raised Rs.15,000 crore a decade ago.