Paytm plans to launch India’s biggest IPO

Bengaluru: Paytm, India's leading digital payments provider, is planning to raise about $3 billion (about Rs 21,800 crore) in an initial public offering (IPO) in India later this year, Bloomberg reported on Wednesday, in what would be the country's largest public debut ever. SoftBank- and Alibaba-backed Paytm, currently India’s most valued startup at $16 billion, is slated to have a board meeting on Friday where the proposal will be considered. Paytm is aiming at a valuation of $25-$30 billion, Bloomberg said in the report, citing a person familiar with the development.If successful, the Paytm IPO would surpass Coal India's offering tha raised Rs 15,000 crore in 2010 in the country's biggest IPO so far. The float is expected to be a mix of new equity issuance as well as a share sale by existing investors. The company is in talks with multiple investment banks, but Morgan Stanley is a leading contender. Paytm is reportedly aiming to list by November and start the IPO work from next month or in July. When contacted, a Paytm spokesperson declined to comment on the matter.The company’s consolidated revenue grew by a little more than 1% in 2019-20 to Rs 3,280 crore, while it cut losses by 30% to Rs 2,942 crore, according to its annual report. Audited numbers for FY21 are yet to be made public. The company has been expanding into financial services verticals such as stock trading, mutual funds and insurance.On Thursday, investment research firm Bernstein issued a note saying Paytm was expected to double its revenue to $1 billion by financial year 2023, with one-third of that coming from non-payments businesses. It said Paytm has got a good start in its lending business for consumers and merchants, which will be crucial for the company in future.According to company insiders, the fintech firm is aiming to gradually turn profitable by rationalising capital-intensive services that yield low margins, a decision it took in 2019. Subsequently, the company stopped most of its cash-back schemes on the Unified Payments Interface (UPI) network.The Noida-based Paytm, housed under Vijay Shekhar Sharma-founded One97 Communications Pvt. Ltd., competes against Walmart-backed PhonePe, Google’s local payments unit Google Pay and Amazon Pay on two fronts—mobile wallets and UPI transactions. It cornered around 12% transaction share on UPI in FY21, according to the Bernstein note. “Payments is a business that is central to our offerings and can bring 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 told ET recently.Paytm has applied to the Reserve Bank of India (RBI) for a licence to set up a proposed New Umbrella Entity (NUE) for digital payments. It has joined hands with IndusInd Bank, Ola Financial Services, Suryoday Small Finance Bank, Zeta, Centrum Finance, and ATM services provider EPS for the same.Also Read: Paytm NUE will stand apart from rivals’, Vijay Shekhar Sharma saysPaytm also wants to convert its payments bank into a small finance bank so that it could start lending directly. Payments banks are barred from lending.The company has applied for an IRDAI licence for general insurance, after it acquired Raheja QBE for Rs 568 crore in 2020. However, the application has not yet been approved.The reports of a potential Paytm IPO comes at a time when multiple Indian startups have firmed up plans to list publicly. Food delivery platform Zomato is expected to be the first to go public as it has filed its Draft Red Herring Prospectus (DRHP) with markets regulator, Securities and Exchange Board of India, late last month. It is aiming to raise $1.1 billion.

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