Paytm pegs IPO at $20 bn valuation, CEO says 'life to become QSQT'

"Our life is going to become QSQT now or quarter se quarter tak (from one quarter to next)," says Vijay Shekhar Sharma.

Paytm IPO will be at $19.5 billion to $20 billion valuation, the company officially revealed for the first time on Thursday. Paytm was valued at $16 billion when it raised funds two years ago.

The IPO was priced at a lower valuation so that more people can participate, the company said.

In a media conference call, Founder and CEO Vijay Shekhar Sharma said, "Our life is going to become QSQT now or quarter se quarter tak (from one quarter to next)." He added that there is no interesting acquisition target on the horizon and the company is more focused on building itself as compared to buying. "But never say never," he added.

"We have been getting personal messages from investors requesting for an allocation in the Paytm IPO. These people have never invested before in a listed company in India."

Sharma also said that Paytm Mall is a separate business and the parent company is not investing any more money in it.

The payments unicorn claims to have become contribution margin neutral, meaning it is recouping its cost from operation revenue. The company's contribution margin grew 198 per cent to Rs 245 crore in Q1FY22 compared to the corresponding quarter in the previous financial year.

The fintech behemoth has raised its initial public offering (IPO) size to Rs 18,300 crore from the earlier Rs 16,600 crore.

Roughly half of the offer for sale (OFS) in Paytm’s IPO, which recently got approval from the Securities and Exchange Board of India (Sebi), will be done by Chinese investor Ant Financial. The OFS size will now inch up to Rs 10,000 crore, which means that Ant Financial will offload shares worth Rs 5,000 crore.

In the Draft Red Herring Prospectus (DRHP) filed by the company, the OFS size was Rs 8,300 crore, and roughly the same amount was being raised via a fresh issue of shares.

Paytm has built a multi-stack architecture through the payment options offered by the company — Paytm Wallet, Paytm UPI, Paytm Postpaid (Buy Now, Pay Later), credit cards/debit cards, Paytm PoS, All-in-One QR code, and Soundbox, among others.

Paytm has also decided not to go ahead with its pre-IPO share sale. It had plans to raise as much as $2.2 billion from its share sale, according to its draft prospectus.

Led by Founder and Chief Executive Officer Vijay Shekhar Sharma, Paytm has expanded beyond digital payments into banking, credit cards, financial services, and wealth management. It also supports India’s financial payments backbone, the Unified Payments Interface, or UPI.

As of FY21, its revenue from operations stood at Rs 2,800 crore from 114 million annual transacting users and it had facilitated 7.4 billion transactions, including transactions made to merchants via its ecosystem and peer-to-peer payments, according to the DRHP.