Ahead Of Planned IPO, Paytm Exits Loginext Investment

SUMMARY

Loginext is a software-as-a-service (SaaS) company that leverages machine learning and cloud technology to provide solutions to manage and optimise logistics and field service operations

Paytm had made a $10 Mn investment in Loginext and had a 31.4% stake as of March 2020

Expected to file its draft red herring prospectus with Sebi by next month, Paytm said in its financial statement that its earnings per share has improved in FY21

One 97 Communications, the parent entity of payments app Paytm, has exited its investment in logistics platform Loginext Solutions, the fintech company noted in its annual report.

Founded in 2014 by Sanghvi and Manisha Raisinghani, LogiNext is a software-as-a-service (SaaS) company that leverages machine learning and cloud technology to provide solutions to manage and optimise logistics and field service operations. The Vijay Shekhar Sharma led fintech firm, which had invested $10 Mn in Loginext in 2015, sold its stake after Tiger Global Management and Steadview Capital led a $39 million funding round in the company in January 2020. During the funding round the founders had informed that a few investors had exited as part of the round.

“During the previous year, the (One97) basis its assessment of future business projections of its associate, Loginext Solutions Private Limited, had recognized provision of INR 9.96 for impairment in the carrying value of its investment. Further, during the current year, the group ceased to have significant influence over Loginext Solutions Private Limited and the interest held in the entity has been recognised at its fair value,” said the Paytm statement in the annual report.

The group held a 31.4% equity stake in the logistics startup as of March 31, 2020.

Paytm saw its overall revenue take a hit amid the pandemic as it fell 9.9% from INR 3,540.77 in FY20 to INR 3,186.8 in FY21 on a consolidated basis. On the verge of a $3 Bn initial public offering, the fintech behemoth’s losses narrowed 42% to INR 1,704.01 Cr from INR 2,943.32 Cr in the same period. The company reported lower expenses on all fronts except employee expenses.

“We used to spend $20-25 Mn a month on cashbacks before, but now we spend $1 Mn but are still gaining the market share,” Paytm founder and CEO Vijay Shekhar Sharma had said at The Makers Summit hosted by Inc42 in March this year.

In its annual report, Paytm also said it borrowed INR 500 Cr and INR 300 Cr from ICICI Bank Limited in separate tranches through overdraft facilities during the fiscal year. This is in addition to INR 1,400 Cr in working capital that the company borrowed from the bank.

During the financial year, it altered the status of Paytm Insuretech Pvt Ltd and Paytm Financial Services Ltd from wholly owned subsidiaries to associate companies. The company’s board has also made investments of INR 90 Cr in Paytm Insurance Broking, INR 105 Cr in Paytm Money and INR 80.11 Cr in Paytm First Games, through its wholly owned subsidiary Paytm Entertainment. One 97 Communications has 41 subsidiaries, joint ventures and associate companies.

Expected to file its draft red herring prospectus with the markets regulator Sebi by next month, Paytm said in its financial statement that its earnings per share has improved from negative (-) INR 488.13 in FY20 to negative(-) INR 281.69 in FY21. Paytm’s much-anticipated public market debut will include a mix of new and existing shares to meet regulatory obligations in India, and offer partial exit to some existing backers.