India's Paytm targets $2.2b domestic IPO
Paytm, India’s largest digital payments company, has filed for an INR166 billion ($2.2 billion) domestic IPO, setting up exits for several private equity investors.
Alibaba Group is the largest shareholder with a 36.8% stake, of which 29.6% is held by Ant Group. SoftBank Vision Fund has 19.6%, while SAIF India has 17.6%. Paytm CEO Vijay Shekhar Sharma (14.6%) and Berkshire Hathaway (2.8%) were the only other selling shareholders identified in a draft prospectus. They will sell a combined INR83 billion worth of shares, with another INR83 billion in new shares to be issued.
Paytm has raised an estimated $3.3 billion in private funding in total, most recently including a $1 billion Series G round at a valuation of $16 billion in late 2019. That round was led by T Rowe Price, although Alibaba and SoftBank made the largest contributions of $400 million and $200 million, respectively.
T Rowe Price was said to have invested $150 million in the Series G, with support from Discovery Capital. Steadfast Capital Management, K2 Venture Capital, Hana Investment, Ventura Capital, and Samba Financial Group also reportedly participated.
Earlier investors include Fontaine Capital Management, SAP Ventures, IDFC Investment Advisors, Intel Capital, and Reliance Capital Ventures. The first institutional investor was Saama Capital, which acquired a 31% stake in 2007, when it was known as SVB India Advisors. The venture capital firm exited to Alibaba in 2017 at a reported valuation of $6 billion.
The filing comes within days of Mobikwik, a similar albeit smaller payments company, proposing to raise up to INR19 billion in a domestic IPO that would facilitate exits for the likes of Sequoia Capital India and American Express. Mobikwik was valued at about $735 million as of June and has raised more than $200 million to date.
Paytm’s larger private equity-backed competitors include Razorpay, which was valued at $3 billion as of a $160 million Series E in April. Earlier this month, Pine Labs, which focuses on payments services for merchants, raised $315 million at a post-money valuation of $3.5 billion. Pine Labs CEO Amrish Rau said at the time that his company would seek a US IPO in the next 18 months.
Founded as a division of mobile services company One97 Communications before being spun off in 2015, Paytm is best known for its digital wallet and payment systems. Users can scan QR codes via mobile device at around eight million retailers in more than 2,000 towns and cities across the country, including in rural areas.
The company’s e-commerce platform, known as Paytm Mall, encompasses consumer goods, travel services, and entertainment. EBay acquired a 5.5% stake in Paytm Mall in 2019 for $165 million, reportedly valuing the business at around $3 billion.
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