Paytm may skip pre-IPO share sale to fast-track listing

Fintech giant Paytm, which is headed for an initial public offering (IPO) at a valuation of $20-22 billion, is considering not going ahead with a pre-IPO share sale so as to fast-track the company’s market debut timeline, multiple sources told Business Standard.

However, Paytm declined to comment on the matter as it is observing a silent period before the IPO. The company’s plan of shelving the pre-IPO fundraise is not related to any valuation differences as had surfaced in certain media reports on Thursday. 

“Pre-IPO is always just an option for companies heading for a market debut and it’s not exercised by most companies. It makes sense to put the pre-IPO option in the DRHP, as otherwise the company cannot raise any primary capital. Companies end up not taking up the pre-IPO option as it only delays the process,” said a company source, requesting anonymity.

Paytm, backed by SoftBank, Berkshire Hathaway, and Jack Ma’s Ant Group, 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.

Paytm’s online and offline payments and its lending business are core focus areas for the company, but the firm also wants to capitalise on the growing opportunities in gaming, travel and ticketing and financial services such as mutual funds and equities trading, the source said.

The company is pushing its payments hardware such as point-of-sale machines and other devices to merchants, the source said, adding that Paytm’s software, which helps merchants manage their operations, would also be a key business over the next 3-5 years.

In fintech, Paytm has fended off stiff competition from a number of global players and has the biggest market share of India’s merchant payments, with over 20 million partners in its network. Its users make 1.4 billion monthly transactions, according to numbers in a recent company blog post.

Among other rivals, Paytm’s merchant payments business will also compete with a combine of Indian conglomerate Reliance and Facebook’s WhatsApp, which have committed to making digital payments easier for India’s mom-and-pop stores.