Paytm, India's leading digital payments provider plans to raise around $ 3 billion (roughly Rs. 21,800 crores) in an Initial Public Offering (IPO) in India later this year. This will be the biggest public appearance in the country.
Paytm, backed by SoftBank and Alibaba, which is currently India's most valuable startup at $ 16 billion, is due to hold a board meeting on Friday at which the proposal will be considered. In the report, Bloomberg said, citing a person familiar with the development, that Paytm aims to value between $ 25 billion and $ 30 billion.
If successful, Paytm IPO will surpass Coal India's offer, which raised Rs 1500 crore in 2010 in the country's largest IPO to date. The float is expected to be a combination of new share issues as well as a share sale by existing investors. The company is in talks with multiple investment banks, but Morgan Stanley is the main competitor. Paytm is reportedly aiming to list in November and start working on the IPO starting next month or July.
When contacted, the Paytm spokesperson declined to comment on the matter.
The company's consolidated revenue grew just over 1% in 2019-20 to Rs 3,280 crore, while reducing losses by 30% to Rs 2,942 crore, according to its annual report. Audited figures for fiscal year 21 have yet to be released. The company has expanded into the financial services sectors such as equity trading, mutual funds, and insurance.
On Thursday, investment research firm Bernstein released a note saying Paytm is expected to double its revenue to $ 1 billion by fiscal 2023, with a third of that from unpaid companies. It said Paytm is off to a good start in lending to consumers and merchants, which will be crucial for the company in the future.
According to the company insiders, fintech aims to gradually turn a profit by rationalizing capital-intensive services that produce lower margins, a decision is made in 2019. Later, the company stopped most cash-back plans in the Unified Payment Interface (UPI) network.
Paytm, a Noida-based company under Vijay Shekhar Sharma founded by One97 Communications Pvt. Ltd., competes with PhonePe, backed by Walmart, and its local payments unit Google Pay and Amazon Pay on two fronts: mobile wallets and UPI transactions. It captured about 12% of the transaction's stake in UPI in fiscal year 21, according to Bernstein's note.
"Payments are a core business of our offerings and can generate engagement on our platforms. But we are much more (than payments). We see ourselves as a full-fledged financial services company," a senior Paytm executive recently said.
Paytm has applied to the Reserve Bank of India (RBI) for a license to create a new proposed umbrella entity (NUE) for digital payments. It has partnered with IndusInd Bank, Ola Financial Services, Suryoday Small Finance Bank, Zeta, Centrum Finance, and ATM service provider EPS for the same.
Paytm also wants to convert its payment bank into a small finance bank so that it can start lending directly. Bank payments prevented from granting loans.
The company has applied for a general insurance license from IRDAI, having acquired Raheja QBE for Rs. 568 crores in 2020. However, the application has not yet been approved.
Reports of a possible Paytm IPO come at a time when several Indian startups have confirmed their plans to go public. Food delivery platform Zomato is expected to be the first to go public, as it submitted a draft Red Herring Notice (DRHP) to the Markets Regulator and the Securities and Exchange Board of India, late last month. . Their goal is to raise $ 1.1 billion.
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