Fintech Paytm set for Indian stock market debut

DIGITAL payments pioneer Paytm last Friday (16) took a major step towards launching India’s biggest initial public offering, telling regulators that it would seek to sell $2.2 billion (£1.6bn) in shares.

Paytm is backed by the Ant Group of Chinese tycoon Jack Ma, which holds a nearly 30 per cent stake, along with Masayoshi Son’s Softbank Vision Fund, Berkshire Hathaway and other investors.

Founder and chief executive Vijay Shekhar Sharma, who has a net worth of $2.3bn (£1.7bn) according to Forbes, holds just under 10 per cent stake. As a part of the IPO, Paytm will issue fresh shares worth `83bn (£817 million) and sell an equal amount of shares through a sale offer, according to its prospectus filed with Indian regulators.

Since 2010, Paytm has become a key digital payments enterprise in a country dominated by cash transactions.

It has benefited from the government’s efforts to curb cash transactions – including the cancellation of nearly all banknotes in 2016 – and from the coronavirus pandemic.

More than 21 million Indian shop owners, vendors and other merchants accept payments of `10 to several thousand rupees using Paytm’s QR code or mobile numbers.

As of March 31, Paytm Payments Bank has 333 million customers, according to its regulatory filing.

The company said it undertook transactions worth more than `4 trillion in 2020-21, making Paytm India’s largest payments platform.

But Paytm has made continual losses and is not sure if it will make a profit. It reported a net loss of `17bn last year, on revenues of `31.86 bn.

“We expect to continue to incur net losses for the foreseeable future and we may not achieve or maintain profitability in the future,” the prospectus has warned. Paytm has reported negative cash flows for the last three years, primarily due to operational losses.