Paytm, India’s most valuable startup, confirms plan for an IPO

India’s most valuable startup Paytm on Monday confirmed to its shareholders and employees that it is planning to file an IPO.

In a letter to shareholders and employees, Paytm said it plans to raise funds by issuing fresh equity in the IPO, and also selling shares of existing shareholders at the event. The startup has given an option to its employees to sell their stake in the firm.

This is the first time the Noida-headquartered firm, which is valued at $16 billion and has raised over $3 billion so far, has commented on its plans for an IPO. The startup said in the letter that it has received in-principle approval from the board of directors to pursue the public market.

Paytm, which is backed by Alibaba and SoftBank, has not shared about its plans to file for an IPO, but has sought shareholders’ feedback on its intention to sell stake by the month-end.

Two sources familiar with the matter told Nerdshala that Paytm plans to raise around $3 billion and is targeting a valuation of up to $30 billion in the IPO. Paytm declined to comment.

Paytm’s letter – obtained by Nerdshala – to shareholders on Monday.

This is not the first time that Paytm has planned to explore the public route. Exactly 10 years ago, after Paytm established itself as the largest mobile wallet firm and expanded into multiple financial and commerce services, the startup had filed with the regulator with the intention of going public. At that time the startup scrapped the IPO plan and instead raised funds from VCs to explore new avenues of growth.

A lot is riding on Paytm’s successful IPO – which posted a consolidated loss of $233.6 million for the fiscal year ended March this year, up from $404 million a year ago. (Startup revenue fell 10% to $437.6 million during this period.) India’s stock markets have yet to be fully tested for stocks of tech startups in the country — although retail investors have seen good returns in recent years. indications are shown.

The startup, which competes with Google Pay and Flipkart-backed PhonePe, has revamped its payments strategy in recent years to assume a leadership position in the merchant payments market.

In a report to its clients late last month, analysts at Bernstein said the startup’s credit tech vertical is likely to lead the next wave of revenue growth.

Overview of Paytm’s Financial Services Ecosystem (Bernstein)

“With the advent of UPI, there is a growing narrative that has questioned Paytm’s market leadership,” wrote the analysts, referring to the exponential growth of payments stacks developed by retail banks in India, which have been funded by several firms including Google and PhonePe. (as well as Paytm), and that has somewhat reduced the appeal of mobile wallets in India.

“However, under the hood, Paytm moves on to merchant payments and has built an ecosystem of synergistic fintech verticals around its ‘Super-Apps’. Ecosystem Payments (Wallet/UPI), full-suite merchant acquisition, credit technology Extends to Digital Banking, Wealth & Insurance technology. We believe that the Super-App battle in India is not a ‘winner takes the game’ but a game of creating a better customer experience with execution, business building and ecosystem integration is,” Bernstein analysts said.

Paytm is the latest Indian giant startup to have expressed interest in going public in recent months. Earlier this year, food delivery startup Zomato said it plans to raise $1.1 billion through an initial public offering. Nerdshala reported last month that Flipkart was in talks to raise more than $1 billion in hopes of raising its financials ahead of the IPO.

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