PE-backed Paytm raises $2.5b in India's largest-ever IPO
Indian digital payments platform Paytm completed the country’s largest-ever IPO – raising INR183 billion ($2.47 billion) – but then saw its stock fall 27% on debut.
The company sold approximately 85.1 million shares for INR2,150 apiece, according to a filing. The offering included 46.5 million shares held by existing investors, with Alibaba Group, Elevation Capital, SoftBank Vision Fund, and Berkshire Hathaway realizing proceeds of INR54.9 billion, INR20.3 billion, INR16.9 billion, and INR3 billion, respectively.
Each investor is making a partial exit. Prior to the IPO, Alibaba held a 34.7% stake in the business. Elevation owned 17.4%, Berkshire Hathaway had 2.6%, and Vision Fund had 1.2%.
Paytm’s stock opened at INR1,950 on November 18 and fell swiftly, ultimately closing at INR1,560. The company has a market capitalization of around $13.5 billion. Its most recent private round – a $1 billion Series G in late 2019 – was completed at a valuation of $16 billion.
The Paytm offering marks the continuation of a newfound affection for pre-profit companies on India’s stock exchanges. Online food services platform Zomato was the first to move, raising INR93.7 billion in July. The most recent addition – prior to Paytm – was beauty e-commerce platform Nykaa, which raised INR53.5 billion last week.
Founded as a division of mobile services company One97 Communications before being spun off in 2015, Paytm claims to be India’s leading digital ecosystem and its largest payments platform. As of March 2021, it provided payment services, commerce and cloud services, and financial services to 337 million registered consumers and 21.8 million merchants.
The company started with a digital payment platform in 2009 – enabling consumers to pay bills and top up mobile phone balances – and then added Paytm Wallet. It has since evolved into a super app, offering a wide selection of payment options, from buy now, pay later to credit cards, as well as travel and entertainment tickets, gaming, insurance, and investment services.
Gross merchandise value (GMV) came to INR4 trillion in the 12 months ended March 2021, up from INR3 trillion a year earlier. Over the same period, revenue fell from INR32.8 billion to INR28 billion – although revenue from payment and financial services rose from INR19.1 billion to INR21.1 billion – while the net loss narrowed from INR29.4 billion to INR17 billion.
Paytm’s Series G was led by T. Rowe Price and featured Alibaba, Vision Fund, and Discovery Capital. Among the company’s earlier investors are 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. It exited to Alibaba in 2017 at a reported valuation of $6 billion.
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