Mumbai:
Indian digital payments leader Paytm, which counts Ant Group and Softbank among its backers, is seeking regulatory approval to raise up to 166 billion rupees ($2.23 billion) in one of the biggest stock market listings in the country.
The offering, which values the company at up to $25 billion according to sources, comes at a time of a pandemic-fuelled boom in India's digital economy and an intensifying battle for market share with Alphabet Inc's Google Pay and Facebook Inc-owned WhatsApp Pay.
The company, formally known as One97 Communications Ltd, will sell new shares worth 83 billion rupees while existing investors will sell another 83 billion rupees in stock in the offering, the homegrown fintech startup said in a regulatory filing on Friday.
The offering from Paytm, whose backers also include Berkshire Hathaway Inc, is expected to kick off a wave of IPOs by local fintech firms that are looking to tap capital markets for expansion plans.
The company said that its total merchant base had grown to 21.1 million as of March 31, 2021, from 11.2 million as of March 31, 2019.
Founded by entrepreneur Vijay Shekhar Sharma, 43, the company was thrust into the spotlight in 2016 during India's shock ban on high-value currency bank notes, which led to a surge in digital payments. It helped Paytm expand its services to insurance and gold sales, movie and flight ticketing, and bank deposits and remittances.
Acording to investment banking sources, the company is looking at a valuation of between $20 billion and $25 billion in the initial public offering (IPO).If Paytm is valued at $25 billion (Rs 1.87 trillion) it will be the ninth-most valuable company in the financial sector after Bajaj Finserv, which is currently valued at $25.8 billion or Rs 2.06 trillion.
The country’s most valuable financial services company is HDFC Bank, with a market cap of $112.6 billion or Rs 8.4 trillion. its total merchant base had grown to 21.1 million as of March 31, 2021, from 11.2 million as of March 31, 2019.
The firm's GMV, which is the rupee value of total payments made to merchants through its app, Paytm Payment Instruments, or through its payment solutions, over a period, increased to Rs 4.03 trillion as of March 31, 2021, from Rs 2.29 trillion as of March 31, 2109.
GMV excludes any consumer-to-consumer payment service such as money transfers.
Paytm derives a majority of its revenue from transaction fees it collects from merchants for their payment services. In FY21, its revenue from payment and financial services was 75.3 per cent of its total revenue from operations.
The company, in its DRHP, said, it will use a significant portion of its proceeds from the public offering in expanding its merchant base and deepening partnership with the merchants.
“We propose to continue with our investments in our sales team by recruiting, retaining and training sales personnel as well as equipping them with the necessary technology. This would enable us to reach more merchants in the cities where we already have a presence as well as to expand our service and product offerings to merchants in new towns and cities in India where we see opportunities to grow our merchant base," the company said.
The DRHP also says that money transfers between consumers and merchants using mobile wallets and Unified Payments Interface (UPI) are becoming a very common exercise, especially after the Coronavirus (Covid-19) pandemic, and this has led to a surge in mobile payments in the country.
Paytm has said it will use the funds from the IPO to strengthen its payment network and for acquisitions.
Several Indian startups have flagged plans to go public as they cash to cash in on growing investor interest from foreign funds.
On Friday, a $1.3 billion stock offering by Indian food delivery startup Zomato, backed by Ant Group was oversubscribed by nearly eight times Others in the pipeline include a blockbuster IPO by Walmart Inc-owned e-commerce giant Flipkart, beauty brand Nykaa and ride-hailing service Ola.
Consolidated net loss for One97 shrank to 16.96 billion rupees for the year ended March from 28.42 billion rupees a year earlier, according to the prospectus. Revenue fell 14.6% to 28.02 billion rupees.
One97 said it may consider a further issue of shares worth up to 20 billion Indian rupees ahead of the IPO.
JPMorgan Chase, Morgan Stanley, ICICI Securities, Goldman Sachs , Axis Capital, Citi and HDFC Bank are advising on the IPO.