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MUMBAI – The owner of India’s leading digital payment provider Paytm plans to sell shares worth Rs 166 billion ($ 2.2 billion) in the country’s largest initial public offering.
One97 Communications, which counts Chinese Alibaba, Japanese SoftBank and Berkshire Hathway Warren Buffet as its top investors, proposes to sell Rs 83 billion of new shares, according to draft offering documents filed with the Securities and Exchange Board of India. An additional 83 billion rupees of shares were offered to existing investors.
The board of directors of India’s most beloved startup met on Friday and set its valuation at between $ 25 billion and $ 30 billion, above its estimated value of $ 16 billion. The share sale could overtake that of state-owned Coal India’s IPO in 2010, when it raised more than Rs 150 billion.
According to the document, Rs 43 billion of the proceeds will be spent on acquiring traders and customers, while Rs 20 billion will be used for new business and strategic acquisitions.
Paytm’s public offering announcement follows that of tech startup Zomato, which last week revealed plans for a $ 1.25 billion IPO, along with a handful of other startups. technology companies who have expressed their intention to list on Indian stock exchanges. Insurance aggregator Policy Bazaar and Delhivery are widely believed to be considering entering the market.
An Indian analyst said Paytm’s plan to go public is coming sooner than expected. “It is surprising that he was so aggressive,” the analyst said, adding that bullish market sentiment and the company’s push into the credit sector may have played into the decision. “These are companies where you have to have a lot of money on the balance sheet for it to work. They have to capitalize a lot more.”
In an interview with Nikkei in 2019, Paytm CEO Vijay Shekhar Sharma said it was important for the company to remain private for at least two to three more years. “Once our customer base is mature, we will enter the list,” he said at the time.
Paytm last raised $ 1 billion in funds from a group of investors, led by asset manager T Rowe Price. The funding round also attracted existing investors such as Ant Financial, Discovery Capital and SoftBank Vision Fund.
As of the filing date of the prospectus, Ant Financial held a 29.6% stake in Paytm and founder Vijay Shekhar Sharma owned 9.6% of the company’s shares.
In the fiscal year ended in March, Paytm’s operating income fell 7.2 percent to 28.02 billion rupees, while its net loss amounted to 17.01 billion rupees, or 42% less than the previous year.
According to a memo prior to the IPO filing by investment managers Bernstein, Paytm is expected to break even in the next 12-18 months. The research company believed that Paytm’s next stage of growth would be led by financial services, specifically consumer and merchant credit technology products.
“With increased financial discipline (rare in the hyper-competitive payments space), Paytm is on track to break even in 12-18 months. We expect Paytm to continue to be the largest ecosystem. payments and FinTech in India, ”said Bernstein. “Combine that with its digital wallet, merchant acquisition and online merchant payments, Paytm has total throughput of $ 52 billion in FY21, up 33% year on year. “
Since One97 started in 2001 as a directory assistance and mobile content company for telecommunications operators, the company has, at various stages, provided services such as mobile top-up and settlement of service payments. public. In 2014, the Paytm mobile wallet was launched and the following year Alibaba invested $ 680 million for an estimated 20% stake.
Over the past two years, the company has faced increasing competition from some of the world’s largest and most aggressive tech companies, such as Facebook, Google, and Amazon.
Wataru Suzuki in Tokyo contributed to this article
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