Paytm Set to Issue India’s Largest IPO

An Overview of the Company

Previously operating under the name One97 Communications, Paytm serves as the country’s leading provider for carrying out any and all digital payments. It hopes to acquire a valuation of approximately USD 25 billion to USD 30 billion for its upcoming initial public offering (or IPO).

Offering its clients full-stack payments, Paym provides a number of financial solutions to its consumers and merchants that operate offline in addition to catering to online platforms.

Founded by Vijay Shekhar Sharma, its headquarters are based in Noida, Uttar Pradesh.

Initial Public Offering

This initial public offering, which is set to be finalized tomorrow (May 28, 2021), would be used to generate funds amounting to approximately INR 21,800 Crores (or USD 3 billion). If approved by the Securities and Exchange Board of India (or SEBI), the IPO offered by Paytm would accrue more than that of Coal India Limited’s 2010 offering which managed to raise over INR 15,00 Crores and has held the position of the biggest IPO in the country thus far.

According to sources not meant to be disclosed thus far, Paytm’s IPO is most likely set to launch in India in November this year and might fall within the festive season of Diwali.

In order to work within the regulatory obligations, set forth in India, the public market offering will feature a mix of new as well as pre-existing shares. These regulations stipulate that 10 percent of the shares be floated within two years and 25 percent in a time frame of 5 years.

Financial Performance and Positions

Financial Performance FY 2019 versus FY 2020

Paytm has managed to lower its costs and has scaled its non-essential payments resulting in it accruing an EBITDA of -65.43 percent for FY2020 in comparison to -112.69 percent for FY 2019. It has managed to reduce its losses by over 30 percent.

Position in the industry

Paytm is the country’s leading provider of digital payments and transactions and is all set to maintain its leadership position in the digital payments space. Paytm has also been dominating India’s mobile payment ecosystem.

Plans of Expansion

The last year has witnessed Paytm increase its revenue and expand its services. Presently, it has managed to expand beyond digital payments and has entered the world of banking, credit cards, offering financial services and wealth management in addition to offering digital wallets.

Competitors

Paytm has successfully managed to ward off competitors including overseas rivals like Amazon Pay, Facebook’s WhatsApp Pay, Google Pay and Walmart Inc. owned PhonePe. Paytm occupies the biggest market share of the country’s merchant payments.

Other Pertinent Information

Operating as a startup, Paytm’s list of investors include Berkshire Hathaway Inc., SoftBank Group Corp., Ant Financial, AGH Holdings, SAIF Partners, Discovery Capital and T Rowe Price.

Banks presently being considered to manage Paytm’s IPO include Citigroup Inc., JPMorgan Chase & Co., and Morgan Stanley with Morgan Stanley being the primary bank being considered. This process is likely to be underway by early July if not next month.

Paytm lends its support to the country’s financial payments cornerstone which is the unified payments interface (or UPI).

As per Paytm’s blog posts, merchant partners that are listed with Paytm amount for over 20 million partners with users said to be making 1.4 billion transactions on a monthly basis.

Paytm has 30 subsidiaries that operate under it in addition to 7 associate and joint ventures such as Paytm Payments Bank and Paytm Money.

Concluding Thoughts

Paytm’s upcoming IPO set to launch in November this year is highly anticipated as it is set to overshoot the country’s largest IPO thus far. More concrete information pertaining to its IPO will is expected to be made available once the company confirms its IPO plans – which is expected on Friday.