The digital payment giant Paytm, one of India’s most valuable startups, plans to raise up to $ 2.2 billion in an IPO, according to a draft paper presented to the country’s market regulator on Friday.
The Noida-headquartered company, which is backed by Alibaba, Berkshire Hathaway and SoftBank, among others, said (PDF) it is issuing $ 1.1 billion of new shares and a sale of $ 1.1 billion US dollars will offer.
The startup, which competes with PhonePe and Google Pay in the world’s second largest internet market, plans to use the fresh capital of $ 577 million to expand its payment services offering and approximately $ 269 million for new initiatives and acquisition opportunities.
Paytm, which was introduced in 2009 to make it easier for users to make digital payments easily over their phone, has expanded into a wide range of services over the past decade. Today it operates a payment gateway, e-commerce marketplace, ticket bookings, and also sells insurance and digital gold. Paytm leads the market in several of the categories in which it operates.
The startup, officially known as One97 Communications and most recently valued at $ 16 billion, has over 333 million users, 114.3 million of whom transact annually, and over 21 million merchants on board, the newspaper said today.
“We have created a payment-driven super app through which we can offer our consumers innovative and intuitive digital products and services,” describes the Vijay Shekhar Sharma-led.
“We offer our consumers a wide range of payment options in the Paytm app, including (i) Paytm payment instruments that allow them to use digital wallets, sub-wallets, bank accounts, buy-it-now-later and asset management accounts and ( ii) important third-party funds such as debit and credit cards and net banking “,
Paytm’s IPO plans come at a time when the pandemic has fueled India’s digital economy and local stock exchanges are showing a growing appetite for consumer tech stocks. Indian grocery supplier Zomato’s $ 1.3 billion initial public offering this week took just hours to fully subscribe to by retail and anchor investors.
Much depends on a successful IPO for Paytm, one of the most famous startups in India, which posted a consolidated loss of $ 233.6 million for the fiscal year ended March this year, up from $ 404 million last year.
Earlier this week, MobiKwik, the Paytm-backed Sequoia company, also filed for an IPO that will raise approximately $ 250 million. SoftBank-backed e-commerce giant Flipkart, which started this week $ 3.6 billion over the next three to four quarters.
Bankers and analysts are bullish on Paytm, whose mobile wallet business has lost its luster in recent years as UPI – a bank-supported payment system in India – found buyers in Google, PhonePe and others and took the market by storm. But Paytm has bounced back, analysts argue.
“With the advent of UPI, there is a growing narrative that questions the market leadership of Paytm,” the analysts wrote, referring to the exponential growth of the payments stack developed by retail banks in India and by several companies including Google and PhonePe, was taken over (as well as Paytm) and what has somewhat reduced the attractiveness of mobile wallets in India ”, the analysts from Bernstein recently wrote in a customer report.
“Under the hood, however, Paytm is a leader in merchant payments and has built an ecosystem of synergetic fintech verticals around its ‘super app’. The ecosystem includes payments (wallet / UPI), full-suite merchant acquiring, credit technology, digital banking, wealth and insurance technology. We believe the super app battle in India is not a “winner needs it all” but a game of execution, business building and creating a superior customer experience with ecosystem integration, ”added the Bernstein analysts.