Paytm board meeting to okay India's biggest-ever IPO today; here's what you need to know

The board of directors at Paytm will meet on Friday (May 28) to deliberate on plans to go public with what is being touted as India's largest-ever initial public offering (IPO) debut. The IPO process will start either in late June or July. The Vijay Shekhar Sharma-backed digital payments platform plans to list on the NSE and BSE in November this year.

Here's what you need to know about Paytm's ambitious plans to go public

Could Paytm's debut be the biggest ever in India?

Paytm is looking at achieving a valuation of $25 billion via this IPO. Through this much-anticipated IPO, the company is planning to raise Rs 21,800 crore.

This could be the largest debut on the bourses ever for an Indian company and it could surpass Coal India IPO. As of now, Coal India's IPO worth Rs 15,000 crore which was issued in 2010 is the largest offering in India.

Investors backing Paytm

The Noida-based startup is backed by investors like Berkshire Hathaway, SoftBank Group, Alibaba, and Ant Group. Ant Financials is the largest investor in Paytm with a 40 per cent stake.

Other big investors backing the digital payments platform include AGH Holdings, SAIF Partners, T Rowe Price, and Discovery Capital.

Who will manage Paytm's IPO?

Banks that have been shortlisted to run Paytm offering are Morgan Stanley, Citigroup, and JPMorgan Chase, with Morgan Stanley being the lead contender.

Paytm's IPO debut will include a mix of new and already existing shares to meet the regulatory requirements. According to SEBI's regulations, 10 per cent shares will have to be floated within two years while 25 per cent within five years.

Paytm's financials

Paytm took off as a platform for online bill payments and mobile recharge in 2009. Its mobile wallet was launched in 2014. Paytm has been trying to get its hands on the New Umbrella Entity (NUE) license in a consortium with digital players including ride-hailing portal Ola. This license is a part of Paytm's efforts to develop more innovative and inclusive digital payment solutions for the Indian population.

Paytm's revenue rose 1.3 per cent to Rs 3,628 crore while its losses declined by 40 per cent and narrowed to Rs 2,942 crore in FY20. However, its finances are likely to improve in 2023. According to the research firm Bernstein, Paytm's revenue base is likely to double by FY23 to $1 billion. "We expect Paytm's revenue base to double by FY23 to $1 billion with non-payments revenue contributing 33 per cent," Bernstein said in its note.

Vijay Shekhar Sharma-led firm is competing with Google Pay, Walmart-backed PhonePe, and several others in the digital payments space in India. Paytm has more than 20 million merchant partners and its users make 1.4 billion monthly transactions, as per the latest company blog.

Paytm CEO had also said earlier that the firm's best-ever quarter was recorded in the first three months of the coronavirus pandemic due to a sudden surge in digital payments. Paytm, which has seen an astonishing rise in usage after demonetisation in 2016, has also been focusing on expanding its revenue and monetising its services over the past year.

The Noida-based digital payments giant has expanded beyond digital payments into banking, credit cards, financial services, wealth management and digital wallets. Paytm also supports the Unified Payments Interface (UPI) in India.

The firm had raised $1 billion from US-based asset management firm T Rowe Price and existing investors like SoftBank and Alibaba. Paytm's valuation was around $16 billion at the time.

IPOs in queue

Around a dozen startups are set to go public in this financial year. Several young businesses in India-Policybazaar, Nykaa, Delhivery and Mobikwik are also planning to go public. Food delivery app Zomato filed preliminary papers for an IPO with capital market regulator SEBI to raise RS 8,250 crore.

Edited by Mehak Agarwal

Also read: Vijay Shekhar Sharma's Paytm eyes India's largest IPO debut in November

Also read: Paytm could pip Coal India in largest market debut ever