Paytm Gears Up For Mega $2.23 Billion IPO, India's Biggest

With over 20 million merchant partners in its network, Paytm still has the largest market share of India's merchant payments.

New Delhi: China's Ant Group and Japan's Softbank backed Paytm, India's digital payments leader is seeking regulatory approval to raise up to Rs 16,600 crore ($2.23 billion), making it the country's largest stock market debut ever, exceeding Rs 15,000 crore raised by state-owned Coal India a decade back.

The offering may value the company over Rs 1.86 lakh crore ($25 billion) and comes at a time when India's digital economy is experiencing a pandemic-fueled boom, as well as an intensifying battle for market share with Alphabet Inc's Google Pay and Facebook Inc-owned WhatsApp Pay.

With over 20 million merchant partners in its network, Paytm still has the largest market share of India's merchant payments. According to data from a recent company blog post, its users conduct 1.4 billion monthly transactions.

According to a regulatory filing on Friday, the company, formally known as One97 Communications Ltd, will sell new shares worth Rs 8300 crore in the offering, while existing investors will sell another Rs 8300 crore stock in the homegrown fintech startup.

The company, founded by entrepreneur Vijay Shekhar Sharma, 43, came to prominence in 2016 during India's surprise ban on high-value currency banknotes, which resulted in a surge in digital payments. It aided Paytm in expanding its offerings to include insurance and gold sales, movie and flight ticketing, and bank deposits and remittances.

The startup, which Berkshire Hathaway Inc. also backs, hopes to capitalize on the same strong investor demand that has propelled fellow unicorn Zomato Ltd.'s massively popular share sale.

Paytm hopes to capitalize on the growing popularity of internet-based consumer companies among investors following the pandemic's acceleration of global adoption of digital technologies.

Paytm has stated that the proceeds from the IPO will be used to expand its payment network and make acquisitions, and it may consider a pre-IPO placement of up to Rs 2,000 crore.

Several Indian startups have announced plans to go public to capitalize on rising investor interest from foreign funds. A blockbuster IPO by Walmart Inc-owned e-commerce giant Flipkart, beauty brand Nykaa, and ride-hailing service Ola are among those in the works.

Among the dozens of anchor investors who piled into Zomato's float were Blackrock Inc. and Fidelity International Ltd., resulting in the company receiving approximately 35 times more bids than it had expected to sell ahead of issue closure on Friday.

Zomato and Paytm are entering a market that has already seen blockbuster listings for a few months. So far, in 2021, approximately Rs 41,700 ($5.6 billion) has been raised through initial public offerings on Indian stock exchanges.

The share sale is being managed by banks such as Morgan Stanley, Goldman Sachs Group Inc., and Citigroup Inc.