India’s leading digital payments provider Paytm is aiming to raise about $3 billion in an initial public offering (IPO) later this year in what could be the country’s largest debut ever, according to a person familiar with the deal.
The startup, backed by investors including America’s Berkshire Hathaway, Japan-based SoftBank Group and Ant Group from China, plans to list in India around November. Paytm, formally called One97 Communications Ltd., is targeting a valuation of around $25 billion to $30 billion. The One97 board plans to meet as early as on 28th May to formally approve the IPO. Paytm hasn’t offered any comments about the reports.
If successful, Paytm’s initial share sale would surpass Coal India Ltd.’s offering, which raised the country’s largest IPO so far in 2010. Banks shortlisted to run the Paytm offering include Morgan Stanley, Citigroup and JPMorgan Chase & Co, with Morgan Stanley being the leading contender. The process is expected to get rolling in late June or early July.
The public market debut will include a mix of new and existing shares to meet regulatory obligations in India. The country’s regulations require that 10 percent of shares are floated within two years and 25 percent within five years.
Rising demand for tech IPOs
Experts are of the opinion that there is a strong demand for tech IPOs. While giants like iPhone maker Apple and Amazon, the eCommerce mammoth, have proven the potential for profitable returns, there are few options for investors looking to get a grip on India’s booming digital economy.
Paytm, led by founder and Chief Executive Officer Vijay Shekhar Sharma, has been focusing on ramping up revenue and monetizing its services over the past year. It has expanded beyond digital payments into banking, credit cards, financial services, wealth management and digital wallets. It also supports India’s financial payments backbone, the Unified Payments Interface or UPI.
Paytm continues to be in stiff competition with a number of global players including American retail giant Walmart-owned PhonePe, Google Pay, Amazon Pay as well as Facebook-owned WhatsApp Pay.
It has the biggest market share of India’s merchant payments. Paytm has over 20 million merchant partners and its users make 1.4 billion monthly transactions, according to numbers in a recent company blog post. In a recent conversation, CEO Mr. Sharma said Paytm had its best ever quarter in the first three months of this year after pandemic-related spending spurred digital payments.
Meanwhile, experts predict an increase in the number of Indian tech companies heading for public debuts in the next few years.