Paytm Plans India’s Largest Ever IPO

studio18 June 23, 2021 13:26:27 IST
Paytm Plans India’s Largest Ever IPO

Tech giant is developing a large-scale fundraising strategy that will also provide liquidation options to existing stakeholders. The company’s long term plans seem unaffected by financial operations’ drop caused by the second wave of Covid.

The Company Aims to Double Its Valuation via Public Debut

According to recent reports, the fintech company Paytm is planning to raise $3 billion – approximately ₹ 21,800 crore – in an initial public offering (IPO) on the Indian stock market later this year. The move is expected to increase the company’s valuation to $ 25 – 30 billion, almost doubling it from the current $16 billion. Until now, the largest IPO in Bharat history was Coal India’s raising of ₹ 15,000 crore back in 2010.

The listing is expected to happen by November and to consist of issuing of new shares and sales by old investors. Paytm is housed by One97 Communications Pvt. Ltd. founded by Vijay Shekhar Sharma who now owns 14.67 per cent of the equity. The largest shareholder with 37 per cent is Alibaba Group Holding Ltd through its ANT Financial subsidiary, followed by Softbank Vision Fund and Elevation Capital, each with around 20 per cent.

The Paytm app is the third biggest player on NCPI’s UPI market with a 12 per cent share for FY21. For May, the app is responsible for 343.81 million transactions worth ₹ 43,741.16 crore. The leader on UPI is Walmart’s PhonePE accounting for a transaction volume of 1,149.84 million and value of ₹ 2,34,123.57 crore for the same month. Google Pay is the runner-up having processed a total of ₹ 1,87,136.95 crore in 880.56 individual payments.

Paytm Is One of the Leading Casino Deposit and Withdrawal Methods

Gambling and betting are regarded as traditional entertainment activities in India. Desi citizens who are not residents of Goa, Sikkim or Daman, or are not wealthy enough to regularly fly there or to Singapore, frequent online casinos and gaming apps. This has become possible due to the development of fast and reliable online transaction options. Paytm and UPI are among the most relied upon casino payment methods and are supported by virtually all reputable operators such as 10Cric.com.

COVID-19 Brings Diverse Effects to Payment Ecosystem

The pandemic further increased the demand for online gambling. Besides a favourite pastime during lockdowns, online casino games offer a good way for bonding with friends and relatives. In its Predictions Report on India for 2021, Deloitte estimates the online gaming market at $2.8 billion (₹ 20,500 crore).

On the other hand, the second Covid wave brought down economic activity and almost all digital and cash payment modes recorded a sharp decline for the month of May. There are just two exceptions in the e-payment sphere and they are easily explainable. The Aadhaar Enabled Payments System (AePS), which channels the direct benefit transfers and sustenance payouts from the government, saw a monthly raise in transaction value from ₹ 22,139 crore to ₹ 24,619 crore. Next, the automated online bill settlement service Bharat Bill Payment System (BBPS) increased its transaction volume from 35.13 to 39.22 million in comparison with April.

All other electronic channels suffered major declines. The Unified Payments Interface (UPI) – the Subcontinent’s most popular e-money platform – decreased with 5 per cent. April’s 2.64 billion UPI transactions to the total value of ₹ 4.93 lakh crore fell down to 2.53 billion settlements worth ₹ 4.9 lakh crore in May. This continued the downward trend after the all-time record month of March when UPI logged 2.73 billion payments exceeding ₹ 5 lakh crore in total value.

Other digital payment systems saw even larger fall backs in May. The National Electronic Fund Transfer (NEFT) registered a 10.3 per cent decline in transaction volumes. The system is mainly used for payments of salaries and is indicative of the state of economic activities. Settlements through the Immediate Payment Service (IMPS) fell down with 15 per cent.

The business-to-business large commercial payments Real Time Gross Settlement System (RTGS) shrank with 18 per cent in volumes processing 12.3 million transactions to the total value of ₹ 83.66 lakh crore. The automatic highway toll collection system FASTag fell by the staggering 41.3 per cent.

Credit and debit card payments at point of sale (POS) terminals followed the trend registering monthly declines of 20.9 and 25 per cent respectively.

Payments in cash, if we use ATM withdrawals as indicator, witnessed a drop as well. In April, Indians took ₹ 1.31 lakh crore in cash via 302 million withdrawals. In May volumes dropped with 21 per cent to 250 million cash-outs to the total value of ₹ 1.07 lakh crore.

On the other hand, micro-ATM withdrawals registered a monthly growth of 13.6 per cent. They are mainly used for rural and semi-urban subsidies and are run by AePS.

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