Paytm launches India’s largest IPO of all time

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India’s largest IPO of all time opened on Monday with the digital payment platform Paytm, which aims to raise nearly $ 2.5 billion (approximately Rs.18,527 billion) in stock listings in what is already a record year.

Behind Paytm are the Chinese tycoon Jack Ma’s Ant Group, Japan’s SoftBank and Warren Buffett’s Berkshire Hathaway, who together own around a third of the company.

The company was founded just under a decade ago by Vijay Shekhar Sharma, the son of a teacher who claims to have learned English by listening to rock music.

Voted India’s youngest dollar billionaire four years ago at the age of 38, he now has a net worth of $ 2.4 billion, according to Forbes. He has a share of almost 14 percent.

Paytm issued new shares valued at Rs. 8,300 billion, with existing shareholders selling shares valued at $ 1.34 billion (approximately Rs.9,929 billion), according to the prospectus.

The IPO is expected to make Paytm India’s most valuable tech company, valued at $ 20 billion (approximately Rs.148.220 billion), 25 percent more than two years ago.

The platform was launched in 2010 and quickly became synonymous with digital payments in a country traditionally dominated by cash transactions.

It has benefited from government efforts to curb the use of cash – including demonetizing almost all banknotes in circulation five years ago – and most recently from Covid.

“I didn’t know Corona was going to happen, but Paytm was very useful to me during the pandemic,” Naina Thakur, the owner of a grocery store in Mumbai, told AFP.

Thakur said about a third of her customers pay her for milk, bread and other everyday groceries through Paytm.

“It’s a lot easier than a bank transfer because all you need to pay is my cell phone number and I’ll get the bill within seven hours,” she said.

Thakur is one of nearly 22 million Indian shopkeepers, taxi and rickshaw drivers and other vendors who accept payments starting at Rs. 10 with the ubiquitous blue and white QR code stickers from Paytm.

The platform had 337 million customers at the end of June, according to the company’s approval application. In 2020-21, it completed transactions valued at more than $ 54 billion (approximately Rs.4.00.195 billion).

Mobile payments in India have skyrocketed, accounting for 26 billion transactions in fiscal 2020-21.

Mumbai-based financial analyst Motilal Oswal estimates mobile digital payments will be worth $ 3.1 trillion by 2026.

Foreign giants have also tried to grab a piece of the pie, including Google and Amazon. Another major player is PhonePe, which is owned by Flipkart and in which US retail giant Walmart has a controlling interest.

‘Can’t be profitable’

But Paytm has been losing money all the time and is unsure when it will make a profit. It reported a net loss of Rs. 1,700 crore last year with sales of almost Rs. 3,200 million.

“We anticipate that we will continue to experience net losses for the foreseeable future and may not be profitable in the future,” the prospectus warned.

Paytm has reported negative cash flows for the past three years, mainly due to operating losses.

With its $ 2.46 billion target, Paytm would surpass Coal India’s $ 2 billion in 2010 to become India’s largest public offering.

Prior to the offering, Paytm raised Rs. 82.35 billion last week from 74 anchor investors including BlackRock and the Canada Pension Plan Investment Board.

Paytm will issue shares in a price range of Rs. 2,080-2,150 on sale due to close on Wednesday.

Indian companies raised a record $ 9.7 billion (around Rs.71,881 billion) through IPOs in 2021, according to figures from market monitor Prime Database.

Grocery giant Zomato was the country’s largest IPO to date, with a $ 1.3 billion share issue in July.

A record number of unicorns were also launched in India that year – startups valued at $ 1 billion.

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