The Ever-Growing Fintech Decacorn Returns to IPO Strategy Decade Later
Ten years ago Paytm’s mother company One97 Communications announced intentions to go public and filed documents at the regulator. At the time the Noida-based startup was not the financial and commerce services giant we know today. The firm then cancelled its IPO plans due to the volatile market environment back in 2011 and turned to venture capital. Software maker SAP AG’s subsidiary SAP Ventures provided $10 million in funding and joined existing investors such as SAIF Partners, Intel Capital and Silicon Valley Bank. Towards the end of the funding round, One97’s valuation reached nearly $300 million.
In 2015, Paytm had already achieved unicorn status with a valuation of $1.5 billion (around ₹ 9,000 crore) before a new round of funding. Old stakeholder SAIF Partners together with Chinese Alibaba’s financial arm ANT Group joined forces in bringing in a total of $675 million. With the completion of the funding round, the startup’s valuation crossed the $2 billion threshold.
In November 2019, Paytm raised $1 billion in a funding effort lead by US asset manager T. Rowe Price. Chief participants were Ant Financial with $400 million, SoftBank Vision Fund with $200 million and US based hedge fund Discovery Capital. The round strengthened Paytm’s decacorn status (achieved in 2018 after raising another $1.3 billion) raising its valuation to $16 billion and turning the company into Bharat’s most valuable startup.
Largest IPO in Indian History is Expected to Double Paytm’s Valuation
The fintech giant is now aiming to double its value to up to $30 billion (around ₹21,800 crore) raising $3 billion at an IPO scheduled for Q4 2021. In case of success, this will be the largest Indian public debut ever after the Centre disinvested 10 per cent of Coal India’s equity back in 2010 for ₹15,000 crore.
The float will include the issuance of fresh shares and exits on old stake positions. Existing investors and employees have been invited to consider the liquidation of their shares by the end of June. Chinese Alibaba currently owns the largest stake of 37 per cent. Softbank and Elevation Capital have around 20 per cent each.
One97 Communications founder Vijay Shekhar Sharma’s equity share has shrunk over the years to the current 14.67 per cent. Forbes estimated his real time net worth at $2.3 billion as of June 2021, placing him at #62 of the richest persons in India (2020) and #1362 (2021) globally.
Online Casino Industry Rely on Paytm and UPI
In his talk at SEOCon Indonesia, ENV Media’s co-founder and CEO Mattias Bergehed placed payment matters among other key issues such as legislation and licensing, history and traditions, device and OS compatibility. Players often choose a betting platform like 10Cric based on their preferred deposit and withdrawal method. Paytm and UPI stand out as one of the most popular payment methods in online casinos.
Paytm Public Debut Announcement Comes Amidst Major Decline in Financial Activity
With just a couple of exceptions, virtually all digital and cash payment modes registered a sharp decline for May on a month-to-month basis. The decline is registered both in transaction volumes and in total settled values.
The biggest drop of 41.3 per cent was recorded by the National Highway Authority of India’s FASTag. Transaction volumes on the electronic toll collection system fell from 164.3 million in April to 116.4 million in May.
The platforms primarily used by companies for large trade transactions – RTGS – and for payments of salaries – NEFT logged declines of 18 and 10.3 per cent respectively.
The Unified Payments Interface remained the most popular net banking channel, still falling back with 5 per cent. In May, UPI processed 2.53 billion transactions or ₹4.9 lakh crore, compared to April’s 2.64 billion payments to the total value of ₹4.93 lakh crore.
The number of debit card POS terminal payments shrank with 25 per cent and credit card transactions fell with 20.9 per cent. ATM withdrawals also fell with a similar rate – 21 per cent – to 250 million worth ₹1.07 lakh crore, compared to 302 million withdrawals to the total value of ₹1.31 lakh crore in April.
The second wave of Covid that hit Bharat easily explains May’s financial transaction figures when we look into which payment modes recorded growth for the period. One is the NPCI’s Aadhaar Enabled Payments System (AePS). It is used by the government for direct benefit transfers and sustenance payouts. The other is the automated online bill payment platform BBPS.
In terms of cash, micro-ATM transactions recorded a substantial raise of 13.6 per cent from ₹21.700 crore in April (72.5 million withdrawals) to ₹24.138 crore in May (82.4 million withdrawals). Micro-ATM transactions are primarily AePS-powered subsidy disbursements in rural areas.