Paytm aims to raise $2.5B amid India’s stock boom

With stocks on a tear in India, the parent company of Paytm, a leading digital payments app, went public Monday with hopes of becoming the country’s largest initial public offering.

The company, One97 Communications, aims to raise about $2.5 billion in a three-day offer that ends Wednesday. It has already drawn huge institutional investors like Abu Dhabi’s sovereign wealth fund, the Texas teachers pension fund and the University of Cambridge, which have invested more than $1 billion.

Paytm was founded in 2010 as a payments transfer business. It now allows users to send money to friends, buy small items like coffee or clothing, and finance big-ticket items like cars.

All but ubiquitous in India’s biggest cities, Paytm commands more than 40% of India’s digital payments market. The company has yet to turn a profit, but it is benefiting from a surge of interest from foreign and Indian investors looking for a stake in India’s surging internet economy. The IPO could value the company at $20 billion.

“Paytm is evolving into a marketplace in itself,” said Amit Khurana, an analyst with Dolat Capital in Mumbai. “There is a lot of appetite to allocate money to this kind of model because it’s seen as the business of the future.”

Investors, in general, have been increasingly bullish on the Indian economy’s recovery from the pandemic and a series of related lockdowns that slashed industrial activity and consumer spending sharply.

India’s central bank, the Reserve Bank of India, has steadily cut interest rates, encouraging banks to lend more and consumers — particularly young, savvy online shoppers — to spend more. With coronavirus infections in India low and foot traffic returning to brick-and-mortar stores, newly sanitationsensitized shoppers may prefer to scan QR codes rather than handle cash.