Paytm App IPO

Digital payments giant Paytm, one of India’s most valuable start-ups, plans to raise up to $ 2.2 billion as part of an IPO. So says a draft paper submitted to the country’s market regulator on Friday.

The company, headquartered in Noida (backed by Alibaba, which with Ant Financial owns 36% of Paytm), Berkshire Hathaway and SoftBank (with about 18%), said it plans to issue new shares worth $ 1.1 billion.

The most valuable stat-up in India?

Paytm in IndiaPaytm, was until recently the most valuable start-up in India. Earlier this month, Paytm had already held talks with Goldman Sachs and Fidelity to launch a pre-IPO round.

The start-up, which competes with PhonePe and Google Pay in the world’s second largest Internet market, plans to spend about $ 577 million to expand its range of payment services and about $ 269 million on new initiatives and acquisition opportunities.

Paytm was launched in 2009 to help users make digital payments over their phone and recharge balances. Over the past decade, the company has created a wide range of services. Today, it operates a payment gateway, an e-commerce marketplace, ticket bookings, and also sells insurance and digital gold. Paytm is the market leader in India in several of these categories.

Paytm, led by Vijay Shekhar Sharma, describes itself as “a payment-driven superapp through which we provide innovative and intuitive digital products and services to our consumers.”

Paytm’s IPO plans come at a time when the Pandemic has boosted India’s digital economy and local exchanges are showing a growing appetite for consumer tech stocks. The $ 1.3 billion IPO of Indian food supplier Zomato this week took only a few hours to be fully subscribed by retail and anchor investors.

So far, Paytm is not yet profitable

Send money with PaytmFor Paytm, much depends on a successful IPO. For the fiscal year ended March 2021, a consolidated loss of $ 233.6 million was reported, compared to $ 404 million in 2020.

Earlier this week, Paytm’s Sequoia-backed rival “MobiKwik” also filed for an IPO, which involves raising about $ 250 million.

Bankers and analysts are optimistic about Paytm, whose mobile wallet business has lost its luster in recent years as UPI – a payment system backed by banks in India – found takers in Google and PhonePe and took the market by storm. But Paytm has recovered, analysts argue.

“With the advent of UPI, more and more people are questioning Paytm’s market leadership,” the analysts wrote, referring to the exponential growth of the payment app, which was developed by retail banks in India and is already used by several companies, including Google and PhonePe.

“Under the hood, Paytm is a leader in merchant payments and has built an ecosystem of synergetic fintech verticals around its ‘superapp’. The ecosystem includes payments, comprehensive merchant acquiring, credit technology, digital banking, wealth and insurance technology. We believe that the Superapp fight in India is not a “winner-takes-all”.”- Bernstein analysts

However, retail investors should consider some risk factors. In its filing today, Paytm said that it is a” foreign-owned and controlled company ” and will retain that ownership even after the IPO and is therefore subject to Indian foreign investment laws.

Paytm also said that its asset vertical Paytm Money has committed” certain violations ” of laws and regulations in the past. And some of the company’s largest investors intend to sell their shares in the IPO.

Last updated on July 17, 2021

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