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With a target of $ 2.46 billion, sponsored by Paytm, Ant Group, SoftBank, Berkshire Hathaway, it will be India’s largest IPO.
India will have the largest initial public offering ever with the Paytm digital payment platform, which aims to raise nearly $ 2.5 billion in a year that has already set a record in the share listings.
Paytm is backed by Chinese tycoon Jack Ma’s Ant Group, Japan’s SoftBank and Warren Buffett’s Berkshire Hathaway, which together owns a third of the company.
The company was founded just 10 years ago by Vijay Shekhar Sharma, the son of a teacher who says he learned English by listening to rock music.
He was the youngest billionaire in India four years ago at the age of 38 and now has a net worth of $ 2.4 billion, according to Forbes.
The nearly 14 percent stake is likely to be much richer with the IPO opening on Monday.
Paytm will issue new shares worth Rs 83 billion ($ 1.1 billion), and existing shareholders will sell shares worth $ 1.34 billion, according to the prospectus.
The IPO is expected to be Paytm’s most valuable technology company in India, with a valuation of $ 20 billion, 25 per cent more than two years ago.
The platform was launched in 2010 and immediately became synonymous with digital payment in a country dominated by cash transactions.
It has benefited from the government’s efforts to reduce the use of cash – including the demonetisation of almost all banknotes in circulation five years ago – and more recently, at COVID.
“I didn’t know the crown[virus pandemic] it would happen, but Paytm was very useful during the pandemic, ”Naina Thakur, the owner of the grocery store, told AFP news agency.
Thakur said one-third of his customers pay him milk, bread and other daily foods through Paytm.
“It’s much easier than a bank transfer because they only need my mobile number to pay and I get the settlement within seven hours,” he said.
Thakur is the owner of nearly 22 million Indian shops, a taxi and rickshaw driver and another vendor that accepts 10 rupees ($ 0.13) payments, using Paytm’s QR-code white-blue stickers.
The platform had 114 million active users a year, according to regulations made by the company in July.
The company said it made more than $ 54 billion in transactions in the 2020-21 fiscal year.
The number of mobile payments in India has risen over the last four years as there were 26 billion transactions in 2020-21.
Mumbai’s financial analysis firm Motilal Oswal estimates that the country’s mobile digital payments will exceed $ 3.1 trillion by 2026.
“Future losses”
But Paytm has suffered constant losses and is not sure if it will make a profit. Last year it had a net loss of 17 billion rupees ($ 231.6 billion), earning nearly 32 billion rupees ($ 436.1 billion).
“We expect to continue to see net losses in the future and may not be profitable in the future,” the prospect warned.
Paytm has reported negative cash flows over the past three years, mainly due to operating losses.
With a target of $ 2.46 billion, Paytm would surpass Coal India’s $ 2 billion issuance in 2010 to become India’s largest IPO.
Prior to the offer, Paytm raised Rs 82,350 billion ($ 1.1 billion) from 74 anchor investors, including BlackRock and the Investment Committee of the Canada Pension Plan, last week.
Paytm will issue shares in the price range of Rs 2,080-2,150 ($ 27.9- $ 28.9) in the bid, which will close on Wednesday.
Hemang Jani, head of strategic stock mediation at Motilal Oswal Financial Services, told Al Jazeera that he was keen on investors in both India and the world of fine technology and startups, “someday investors will have a business model, profitability and cash flows”.
Indian companies have hit a record $ 9.7 billion in 2021 through IPOs, so far as Prime Database market monitor data has shown.
The food distribution giant Zomato was the largest annual IPO in the country to date with a $ 1.3 billion share in July.
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