Paytm In Talks With Zomato To Sell Ticketing Biz For INR 1,500 Cr

SUMMARY

While the talks are in advanced stages, no final decision has been made on the matter even as there are other “suitors” for Paytm’s business as well

The deal will enable Zomato to scale up its “going out” business while Paytm will look to shift its focus to its core digital payments business

The sale comes as Paytm grapples with RBI’s crackdown on its payments bank arm and reporting its first quarter of decline since listing in Q4 FY24

Paytm and foodtech giant Zomato have reportedly held talks to acquire the fintech major’s movie ticketing and events business.

The discussions between the two parties are veering towards a valuation of INR 1,500 Cr for Paytm Movies and Paytm Insider verticals, an ET report said.

“Paytm Movies and Paytm Insider are being merged to bring in synergies between the two teams. The idea is to build this as a single unit.. Zomato’s interest in this segment has been there for a while so it fits in very well,” a source told the publication.

Meanwhile, Bloomberg too reported that Paytm was in talks with Zomato to sell its movie and events ticketing business as the former chalks out a “revival strategy amid weakening sales”. As per the Bloomberg report, talks are still ongoing and no final decision has been made on the matter. It also added there were other “suitors”for Paytm’s business as well.

Meanwhile, Paytm, without confirming the talks with Zomato, said that it was considering a potential transfer of Paytm’s Entertainment business.

In a filing with the BSE, Paytm said, “The Company routinely explores various strategic opportunities aimed at enhancing shareholder value. The potential transfer of Paytm’s Entertainment business, a component of our Marketing Services, is one opportunity under consideration”.

“However, any discussions currently underway are preliminary and do not involve any binding agreements that require approval or disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, or other applicable laws. As such, any information pertaining to these discussions should be considered speculative at this time,” the company said in a filing.

Meanwhile, Zomato also confirmed that it is in discussions with Paytm to snap up the fintech major’s movie ticketing and events business.

The foodtech giant added that no binding decision has been taken at this stage that would warrant the approval of its board.

“The above discussion is being undertaken with an intent to further strengthen our Going-out business and is in line with our stated position of focusing only on our four key businesses currently,” the filing added.

The transaction will enable Zomato to diversify its portfolio and scale up its “going out” business. The foodtech major currently offers ticket-booking services for events as well as organises a food festival called Zomaland.

On the other hand, the deal will allow Paytm to focus on its core areas of digital payments and shore up its merchant base and sales.

For context, Paytm’s core digital payments and financial services distribution businesses clocked an operating revenue of INR 7,990 Cr in the entire fiscal year 2022-23 (FY23).

Meanwhile, Paytm Movie reported an operating revenue of INR 976 Cr in FY23 while revenue for Wasteland Entertainment (parent of live events platform Paytm Insider) reported a revenue of INR 192.7 Cr in the year ended March 2023. A rough calculation reveals that the movie and events ticketing business accounted for 13% of Paytm’s top line in the year ended March 2023.

Zomato’s bid to acquire Paytm comes close on the heels of reports that competitor BookMyShow was set to close a funding round at a valuation of INR 7,500 Cr, which will see private equity firm KKR buyout existing shareholders.

Paytm is one of the biggest players in the online ticketing space, after BookMyShow. The fintech major has rapidly scaled its presence in the ticketing arena in the past few years. In 2017, it bought a majority stake in Insider.in for around INR 35 Cr. Afterwards, it also acquired Chennai-based online ticketing platform TicketNew in 2018 to bolster its presence in the space.

Despite having made big headways into the online ticketing arena, Paytm is looking to sell the verticals as it turns its focus back on digital payments amid the Reserve Bank of India’s (RBI) crackdown.

The company was thrusted in choppy waters earlier this year after the central bank, in January, barred the fintech major’s payments bank arm from onboarding any new customers and undertaking any fresh customers deposits or credit transactions. It also directed Paytm Payments Bank to not provide any other banking services, such as UPI facility and fund transfers.

While the company has undertaken several steps to allay regulatory concerns, Paytm has been on a downward spiral in terms of its revenues. The startup reported its first quarter of revenue decline since listing in the fourth quarter (Q4) of FY24.

Paytm’s revenue from operations decreased by 2.9% YoY to INR 2,267.10 Cr in the quarter ended March 2024 compared to INR 2,334 Cr in the same period last year. Meanwhile, losses ballooned 3X year-on-year (YoY) to INR 550.5 Cr in Q4 FY24.

As a result, the company’s stock has also taken a major beating on the bourses. On a year-to-date (YTD) basis, Paytm’s stock is down 33.11% while the company’s share price has tumbled by more than half in the past 12 months.

Paytm’s stock closed 0.84% lower at INR 424.90 on the BSE on Friday (June 15).

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