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Indian payment group Paytm has convened a shareholders meeting next month to approve an initial public offering billed as the largest in the country with plans to raise up to $ 3 billion.
The group, backed by China’s Ant Group and Japan’s SoftBank, has appointed JPMorgan, Morgan Stanley, Goldman Sachs and ICICI Securities of India to lead the issue, according to people with knowledge of the company. The offer will target a Paytm valuation of $ 29 billion.
With operations ranging from digital payments to banking, Paytm was valued at $ 16 billion in its last round of financing in 2019 and has long been a success story for the growing technology sector. ‘India.
But it was dethroned as India’s most valuable start-up this month by the company edtech De Byju.
It also faces stiff competition in online payments from Western rivals like Google Pay and PhonePe, a service provided by Indian e-commerce platform Walmart Flipkart.
Five years ago, “Paytm ruled India, it was in the driver’s seat,” said Neil Shah, an analyst at technology research firm Counterpoint. “It simply came to our notice then.
“This is the right time to go public, because competition is increasing rapidly and this preference for Paytm is declining; IPO could make a difference for them to compete,” he said.
As a generation of Indian tech companies mature, several other unicorns are contemplating listing this year.
Food distribution company Zomato presented his prospectus project in April, seeking to capitalize on a sharp rise in online deliveries to India during the coronavirus pandemic.
Insurance aggregator Policybazaar and beauty e-commerce site Nykaa have also said they are considering listings such as Walmart’s Flipkart.
Under its co-founder and CEO Vijay Shekhar Sharma, Paytm was one of the first to target digital payments and currently has about 150 million monthly active users.
But Paytm has struggled to be profitable, even though it has reduced its losses for two consecutive years.
Last year, Paytm reported a loss of $ 17 billion ($ 230 million) compared to $ 29 billion the previous year.
“We are seeing many of these emerging companies looking at an Indian quote, in part because global liquidity is high,” said Gokul Rajan, capital markets lawyer for Cyril Amarchand Mangaldas.
He said many companies also considered domestic quotes, which are regulated by the Securities and Exchange Board of India, as “the most viable option” compared to overseas offers or special purpose acquisition companies.
“Sebi regulations allow unprofitable companies to go public, and Indian unicorns are getting a little closer to the U.S. market with valuations based on their potential rather than historical results,” he said.
Paytm’s Sharma has been no stranger to controversy over the years. It was wrapped in a blackmail scandal in 2018 after accusing his head of public relations of trying to extort $ 2.7 million.
The chief executive has fiercely criticized the “arbitrary powers and influence”Silicon Valley companies in India and supported New Delhi’s ban on Chinese applications, even though its main investor is Chinese.
He once tweeted that it is “time for the best Indian businessmen to introduce yourself and build the best for Indians, for Indians! ”
Additional reports from Hudson Lockett in Hong Kong
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