Indian digital payments leader Paytm, which is backed by Chinese billionaire Jack Ma’s Ant Group and Japan’s Softbank, is seeking approval to raise up to Rs 16,600 crore ($2.23 billion) in what could be one of the biggest IPOs in the country.
The offering, which values the company at up to $25 billion according to sources, comes at a time of a pandemic-fuelled boom in India's digital economy and an intensifying battle for market share with Alphabet Inc's Google Pay and Facebook Inc-owned WhatsApp Pay.
The parent company of Paytm One97 Communications Ltd, will sell new shares worth Rs 8,300 crore while existing investors will also sell another Rs 8,3 00 crore stock in the offering, the financial services startup said in a regulatory filing on Friday.
Interestingly, Paytm's holding company One97 piled up a consolidated net loss of Rs 1, 696 crore for the year ended March which came down from an even bigger loss of Rs 2, 842 crore in the preceding year earlier, according to the company’s prospectus. The revenue of the company was put at Rs 2,802 crore which was 14.6% lower than the previous year.
Founded by entrepreneur Vijay Shekhar Sharma, 43, the company shot into the limelight in 2016 during India's shock demonetisation of high-value currency bank notes, which led to a sudden demand surge in digital payments.
Paytm plans to use the funds from the IPO to strengthen its payment network and for making acquisitions.
Zomato sits pretty
The Paytm IPO comes after the online food ordering platform Zomato's Rs 9,375 initial public offering (IPO) being subscribed 38.25 times so far on the third and final day of the issue on Friday, according to subscription data on the exchanges. The IPO of the leading online food delivery service provider opened for investors on Wednesday, July 14 for a period of three days. IPO was fully subscribed on the first day of the issue itself on Wednesday with a strong response from retail and institutional investors.
Interestingly, Zomato’s losses have been increasing with each passing year between 2017-18 and 2019-20 from Rs 107 crore to Rs 2,386 crore.
However, the lavish cash splurge has also enabled the startup to increase its sales more than five times from Rs 466 crore to Rs 2,605 crore which appears to be the prime concern of investors who are looking into the future for big returns.
"Although the company's plan of growth is dynamic, it needs to be reflected in the financials too. Young investors must financially educate themselves before investing no matter how much hype IPOs have," said Prateek Singh, Founder and CEO of LearnApp.com.
Experts said the response to Zomato’s IPO and its post-listing performance will have an impact on other startups such as Paytm and Mobikwik, who are also planning to go in for IPOs to raise funds.