Paytm, India's second most valuable internet company after Byju's, plans to raise $1.1 billion (Rs 8,250 crore) from anchor investors including Blackrock, Canada Pension Plan Investment Board, GIC Pte, and other sovereign wealth funds ahead of its initial public offering (IPO).

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According to CNBC-TV18 sources, the anchor investment round of One97 Communications Ltd, which runs the Paytm payments service, will close on November 3. As per a communique from the company, the anchor round will see mega investors making one of their first investments in India through tech-focused funds.

Paytm's anchor round, the largest India has ever seen, is in itself bigger than the overall IPO size of most Indian companies, said a source. Currently, Paytm is narrowing down its anchor investors for its mega IPO. The company, according to the source, has garnered interest from blue-chip global tech funds that are set to participate in its anchor round.

Also Read: Paytm to be among top 50 companies post-IPO worth Rs 18,000 crore

Anchor investors are institutional investors who are invited to buy the shares of a company before its IPO rollout. The process helps in boosting investor confidence and improving the popularity of the issue. However, these investors are not allowed to sell their shares until 30 days after the listing, as per Sebi norms.

The development comes days after Paytm increased its IPO size from Rs 16,600 crore to Rs 18,300 crore. The IPO will include a fresh issue of Rs 8,300 crore and an offer for sale (OFS) of Rs 10,000 crore. The fintech giant has kept the price band at Rs 2,080-2,150 per share and it will remain open for subscription between November 8 and 10.

Also Read: Paytm IPO key risks: From history of losses, ownership case, foreign control to COVID-19 impact

Paytm's IPO is poised to be the biggest in the history of the Indian capital markets. The company was last valued at $16 billion when it raised a billion dollars in November 2019. After the IPO, the company's valuation is likely to increase to $20 billion.

Led by Vijay Shekhar Sharma, Paytm is expected to use the IPO proceeds for acquisitions, investing in new business initiatives, and forging strategic partnerships. When asked about the company's plans to invest in overseas markets, Sharma said, “International is something we will be focusing on, once we feel the India market is matured enough."

Following the quarter ended June 2021, Paytm's revenue was estimated at Rs 948 crore, up 46 percent year-on-year. Meanwhile, its losses stood at Rs 382 crore. The company's total user base was 337 million as of June end. It also had over 21.8 million registered merchants.

Also Read: Ex-director seeks stay on Paytm IPO; Delhi HC refuses to halt company's plans

Besides, Paytm's gross merchandise value increased from Rs 697 billion in the three months ended June 30, 2020, to Rs 1,469 billion in the three months ended June 30, 2021. Going by the company's red herring prospectus, its revenue from operations is up by 62 percent year-on-year while its contribution margin positive is up by 85 percent year-on-year for Q1FY22.

In addition to the revenue generated from its payments and financial services, the company’s lending vertical has also seen a huge uptick as Paytm disbursed 1.4 million loans in Q1FY22 and 2.8 million loans in Q2FY22. As of September 2021, Paytm had 12,80,000 devices deployed across the country.

"The company is not focussing on UPI alone. Instead, it has built a multi-stack payment architecture through the payment options it offers — Paytm Wallet, Paytm UPI, Paytm Postpaid (Buy Now, Pay Later), credit cards/debit cards, Paytm PoS, All-in-One QR code, Soundbox among others," read a communique received from Paytm.

According to a RedSeer report, Paytm is the largest payments platform in India based on the number of consumers, number of merchants, number of transactions, and revenue.