Before India’s startup ecosystem and its onlookers could recover from food-delivery company Zomato’s initial public offering (IPO), they got hit with another one. A super-sized IPO from India’s largest fintech, Paytm*.

On 16 July, One97 Communications Ltd (OCL)—which runs Paytm—filed its IPO prospectus. The company laid out plans to raise Rs 16,600 crore ($2.2 billion), half in fresh issue and half in offer for sale. It’s expecting a valuation valuation Business Standard Paytm files for India's largest IPO, eyes $25 bn-$30 bn valuation Read more of $25-30 billion from this IPO, according to media reports.

That is a 66-80 times revenue multiple based on its 2021 operating revenue of Rs 2,802.4 crore ($375.4 million)—higher than even what Paytm’s lead investor, China’s Ant Group, commanded. The financial services giant, whose 2020 IPO was scuppered by Chinese regulators, was valued valued Investors line up for Ant Group's record $34.4 billion IPO Reuters Read more at about $300 billion. It was 31X its forecasted net profit in 2021, and about 17X its revenue in 2019—it made $17.5 billion that year.

For Paytm’s founder Vijay Shekhar Sharma, this is a long-standing dream come true. At an offsite in Agra, in 2019, he even chided his employees for thinking of selling their Paytm shares. He believes that Paytm and its different entities can each become $10 billion businesses, eventually becoming more valuable than even India’s largest private bank, HDFC Bank, in the future. “The bet here is on Vijay and the legacy he wants to create,” says a former senior executive who was present at the offsite.

But before it heads into the IPO, Paytm plans to raise Rs 2,000 crore ($266.7 million) in a pre-IPO placement. Ant Group and Paytm last raised money in November 2019, when global investment management firm T Rowe Price and Japanese conglomerate SoftBank invested $1 billion at a $16 billion valuation. “A lot has changed since then. So if you want to position a certain valuation to reflect the current times, the pre-IPO serves as a benchmark for the upcoming IPO price,” says a Chennai-based veteran investment banker.

A pre-IPO is also one way for Paytm to test the waters on the demand for its IPO. Retail and institutional investors alike lapped lapped The Ken Will Zomato bring “less sense, more sex” to the Sensex? Read more up Zomato’s offer last week. But the demand for Paytm’s IPO will be a test of whether Indian investors treat fintech any differently, considering the regulatory gauntlet thrown to these companies every now and then.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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