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India’s digital payments start-up Paytm files for a $2.2 billion IPO

Paytm, PhonePe, Google Pay (Gpay) and Bhim UPI QR Codes (Standee) will be kept outside in a medical store in Gurugram on the outskirts of New Delhi, India for cashless payments on May 16, 2020.

Nasir Kachroo | NurPhoto | Getty Images

Indian digital payments start-up Paytm plans to raise up to 166 billion rupees ($ 2.22 billion) in an initial public offering, according to draft paper submitted to the country’s market regulator on Friday.

Paytm will issue new shares worth Rs. 83 billion and an offer to sell an additional Rs. 83 billion from existing shareholders including Japan’s SoftBank, China’s Ant Group and Berkshire Hathaway.

Talks are also underway to potentially carry out a pre-IPO placement of Rs.20 billion, which would reduce the size of new shares issued.

Headquartered in Noida, the company said it will use the proceeds from the IPO to expand and strengthen its payments ecosystem, as well as invest in new business initiatives, acquisitions and partnerships.

Paytm started in 2009 as a platform that enabled Indians to pay their bills and top up their cellular plans. More than a decade later, the startup has become a ubiquitous name in India’s digital payments space, as millions use the service to pay for things like utility bills, groceries, topping up cell phones, and buying movie tickets. Paytm is also a fully licensed digital bank and has launched insurance, asset management, and cloud and commercial services.

But it faces tough competition for market share from rivals like Google Pay, Walmart’s PhonePe, and Facebook’s WhatsApp messaging service that allows users to send money through the app. Paytm stated that it had around 333 million users as of March 31.

For the year ended March 31, One97 Communications, which owns Paytm, posted a loss of Rs.16.96 billion – a slight improvement over the loss of Rs.28.42 billion the previous year. Sales fell by almost 15% to Rs 28.02 billion, according to the prospectus.

Paytm isn’t the only Indian tech start-up about to enter the market. Grocery delivery company Zomato filed for an initial public offering earlier this year, while transportation company Ola and e-commerce giant Flipkart are reportedly looking at listing options.

A venture investor previously said that 2021 would “mark the beginning of a new era for the Indian startup ecosystem,” with a number of major IPOs.

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