One97 communications, the parent firm of Paytm is planning a Diwali Bonanza in what is touted as the country’s biggest IPO(Initial Public Offering) so far.
The $3 Billion worth PayTm IPO is seen as the biggest after Coal India’s Rs 15,475 crore issue in 2010. Merchant Bankers shortlisted to run this offering include Morgan Stanley, Citigroup Inc., and JPMorgan Chase & Co. Paytm will launch a mix of new and existing shares to abide by the regulatory obligations in India.
What is seen as the biggest announcement so far amidst the Pandemic has not been an easy road for the company. Let’s find out what it holds in its kitty for our country.
What’s the business-like?
Paytm led by Vijay Shekhar Sharma (Founder and CEO) has expanded its operations beyond digital payments into credit cards, financial services, wealth management, and digital wallets. However, Paytm’s biggest achievement and strength is its diversification. Paytm owns up both the issuing as well as the beneficiary bank; i.e the Paytm Payments Bank(PPB) as well as the UPI. This has resulted in the lowest UPI failure rate so far by any app in India.
Today, Paytm users can virtually send money across the wallets. Even the fruit vendor in India got used to the new change! A new era of the digital economy led by Paytm. Also, it made getting money out from your friends much easier. However, Paytm is not alone in the market. There is a constant danger of its market share being eaten by new payment apps like PhonePe, GooglePay, Whatsapp Pay, and many other digital wallets. Yet, it has somehow managed to grasp the biggest percentage share of India’s digital payments.
Biggest Announcement – The IPO
IPO in layman’s term is selling the parts of private business to the public in the form of stocks. Any new, young ,or any old company which decides to list its shares on the stock exchange can make its debut using IPO. The primary reason to launch IPO is obvious that is to raise money from the public but the other reason could be liquidity. As long as the demand for the shares is high, the company can raise money any time and from anywhere it needs.
With the PayTm IPO launch, the company is targeting a valuation of $25 billion to $30 billion. The biggest IPOs so far were dominated by Coal, Gas, Power, and Realty market. With this size, Paytm might open up the gates for other tech companies.
As reported, India surpassed China, South Korea ,and the US in the number of real-time online transactions this year. Nowhere else in the world has such large numbers of users started using online payments in such period of time. The surge was induced by this pandemic era. As a result, the company witnessed the best-ever quarter in the first three months of this year. The board is quite confident about its IPO launch as it will help Paytm in becoming the mascot of electronic payments again in India.
The blockbuster debutant Paytm will open up the floodgates to many Indian startups like Zomato, Delhivery, Policybazaar, Freshworks, Flipkart, Nykaa, BYJU’S and Pepperfry. The year 2021 could make history as Big Fat IPO year.
Here is the quick list of the successful IPOs which took its owner from rags to riches:
- Coal India is considered as one of the biggest IPO of India until now with an IPO value of around Rs 15,475 crore in 2010
- Anil Ambani led Reliance Power launched a massive issue worth Rs 11,700 crore in the year 2008
- HDFC Standard Life Insurance IPO made a debut in the year 2017 with the issue worth Rs 8695.01 crore
- Dating app Bumble (US-based company) launched its IPO at a valuation of $8.2 billion which made Whitney Wolfe Herd a billionaire.
- Didi Chuxing (a Chinese Company) which is planning to list in 2021 at a targeted valuation of more than $60 billion was found in 2012 only
What took so long?
Not many tech start-ups are successful in India. The road is bumpy for most of them. With SEBI’s (Securities and Exchange Board Of India) rules and regulations, it becomes difficult to get listed on Indian bourses. India has lost a chunk of potential IPOs to Nasdaq (US Stock Exchange) because of its regulatory obligations. To attract more startups, SEBI has relaxed many regulations with IGP (Innovators Growth Platform) as its new separate platform for trading in 2019.
It took eleven years for the company Paytm to go public. But it’s a significant step towards acquiring a small finance bank license. Paytm started taking smaller steps preferably one at a time. It began its operation in 2000 by selling content to users through telecom operators. In 2010, the company chooses Smartphone as its distribution channel. In 2014, it launched its licensed wallet ,and later in 2015 it was backed by Ant Financial, then Alibaba, and then SoftBank. From providing the cancellation insurance against movie tickets to buying gold for as small as Rs 11, Paytm has come a long way.
There was no Silicon Valley or Stanford for Vijay Shekhar Sharma. But he made his own Silicon Alley in India itself. The CEO of the company was reported saying this in 2019 “First, learn to do one thing really well. Then build the next level of business on top of it. That’s the common thread”. It seems as if the company was waiting for the right time to sweep the market.