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Paytm eyes Rs 21,000 crore IPO this year: Report

Paytm cricket

Vijay Shekhar Sharma’s One97 Communications Ltd., the parent entity of Paytm, is looking to list on the stock exchanges sometime this year, Bloomberg reported. The company is looking to raise $3 billion or Rs 21,800 crore through the initial public offering (IPO).

Quoting an anonymous source, the report said that the company plans to list its stocks on Indian exchanges around November and its offering could coincide with the Diwali festival season. Paytm’s investors include Berkshire Hathaway, SoftBank and the Ant Group. One97 could fetch a valuation of $25 billion to $30 billion, the report said. Adding that One97’s board is scheduled to meet this Friday to formally approve the IPO plan, the report added.

Bloomberg said that Morgan Stanley is likely to be the lead banker for the IPO, with the Citigroup and JP Morgan also acting as underwriters. The IPO process will start in late June or early July, it said.

While many startups in India are looking to list their shares abroad, through the popular Special Purpose Acquisition Company (SPAC) route, Paytm is going the direct listing route on the Indian markets. The SPAC route for stock listing allows companies to set up a holding company, without any commercial operations, solely for the purpose for raising capital through an IPO. Effectively, an Indian entity can set up a holding company in the United State which will be the

Paytm’s Empire

Paytm is the third largest UPI (Unified Payments Interface) player but unlike the market leaders, it has a banking license. This has given the firm a competitive advantage over its competition in terms of smoother processing of transactions and lower failure rates. This is why merchants are happy to move to a Paytm account and abandon their traditional bank account, the company said in a series of blog posts.

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While Payments Banks are not allowed to lend, Paytm has partnered with several lenders at the back-end to provide consumer and merchant loans. Even though Paytm is not a universal bank, in the last few years Sharma has built a complete financial services group through specific licenses and  acquisitions.

Paytm has a stock-broking, pensions and mutual funds business under Paytm Money, a payments gateway business, a digital gold platform and also offers forex services. It has partnered with Citibank and SBI Cards to issue co-branded credit cards. The company had also applied for a Peer-2-Peer lending license from the Reserve Bank of India (RBI) in March 2019. One97 and Sharma also acquired Raheja QBE, a Mumbai-based general insurance company in July last year. Paytm plans to cross-sell insurance products to its customers by integrating the insurance entity with its wallet and payments bank vertical.

The company has an e-commerce arm called Paytm Mall, and it also built an app store last year to counter the dominance of Google’s Android Play Store in India.

Paytm Payments Bank

  • 64 million accounts, with Rs 3,200 crore in deposit
  • Opened 1 million savings and current accounts in a month
  • In March 2021, PPBL processed over 975 million digital payments transactions
  • 20 million merchants on its network

Paytm Wallet

  • 325 million wallet accounts
  • Over 78% of wallet users transact on a daily basis
  • 85% of wallet transactions are merchant transactions across online platforms and kirana stores

Unified Payments Interface

  • 100 million UPI handles on its platform
  • Processed 471 million transactions worth Rs 43,221 crore in March 2021
  • Processed 340 million transactions worth Rs 38,490 crore in February 2021
  • Technical Decline rate at 0.01% in April 2021 compared to 0.03% as a beneficiary bank in March 2021
  • Technical Decline rate  at 0.01% in April 2021 compared at 0.05% as a  remitter banks in March 2021

FASTag

  • Issued 9 million FASTags
  • 42 million monthly issuer transactions
  • Acquired 270 toll plazas
  • 57 million monthly acquirer transactions

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