Fintech giant Paytm has hired four banks including JPMorgan Chase and Goldman Sachs for its proposed initial public offering, according to several media reports. The board of One97 Communications, the parent company of Paytm, has also greenlit the appointment of Morgan Stanley and ICICI Securities to help with the sale.
The company is set to go for a massive initial public offering with plans to raise INR 21,800 Cr ($3 Bn) in the IPO by November this year. It is expected to be the largest public market debut in India in a year in which food aggregator Zomato and used cars marketplace CarTrade, epharmacy startup PharmEasy, beauty ecommerce brand Nykaa and insurtech startup PolicyBazaar are likely to list publicly. The Vijay Shekhar Sharma-led company is targeting a valuation of $25 Bn – $30 Bn, a big jump from its current $16 Bn valuation.
As per analysts, Paytm has shown financial discipline which is rare in the hyper-competitive payments and fintech space. Paytm is said to be on track to break even in 12-18 months and is expected to be a major force in the payments and fintech market because of its diversification.
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. 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 achieved this on the back of lowering its expenses from INR 6,138.23 Cr in FY20 to INR 4,782.95 Cr in FY21, the company’s annual report showed. While Paytm spent a staggering INR 1,397.05 Cr in marketing in the financial year ending March 2020, the digital payments company cut its marketing spend by 62% to INR 532.32 Cr amid the pandemic as digital adoption went up.
One97 Communications operates Paytm Payments Bank Limited, Paytm General Insurance Limited, Paytm Life Insurance Limited, Paytm Money Limited, Paytm E-Commerce Private Limited, Paytm Entertainment Limited among other smaller entities. These combine to give Paytm a strong acquisition channel for its core business of payments and fintech services.
This diverse business model also called for a varied mix of domain experts and key vertical leaders to give Paytm an entrepreneurial edge across its various revenue streams. Since, the next milestone for Paytm would be to create value through building multiple businesses around the core Paytm brand, its recent hires and internal promotions since 2018 have come with strong domain experience in financial services and building scaled-up business verticals.