Ahead of Paytm IPO in November, the company’s founder and chief executive officer (CEO) Vijay Shekhar Sharma on Thursday said that the digital payment and financial services platform may not need more capital beyond the initial public offering (IPO) fundraise unless there are any extraordinary circumstances.
Chief financial officer (CFO) Madhur Deora said the firm’s valuation post listing on the bourses will be about $20 billion.
“We could raise money from any set of investors at a higher price, but we believe investors should make money,” Deora said. He said that apart from ANT Financial, most other shareholders are selling their shares on a pro-rata basis. He added that inbound interest from investors is tremendous from Indian as well as global blue-chip investors.
On why Paytm didn’t go for a pre-IPO, Sharma said the company wanted the public listing on time and give everyone the opportunity to invest. “We kept price rationally at a lower number from the choice of different valuations we had on the table,” he explained.
Sharma said the digital payments platform will invest in technology, which means more employees and more customer marketing spend. Paytm is making more money and losses have reduced, he said. “We have started recruiting in tier 2-3 towns. We will continue with flexible working for employees,” he added.
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Paytm’s preference is to build over buy any business and it will look at mergers and acquisitions (M&A) only if there is a new capability, he said.
When asked about competition from other IPOs, Sharma said “competition is good, as the tide comes everyone goes up.”
Paytm is likely to launch its initial public offering (IPO) on November 8 and is targeting a price band of Rs 2080-Rs 2150, sources have indicated.
They added that the firm is set to raise IPO issue size to Rs 18,300 crore from the earlier Rs 16,600 crore to meet increased investor demand. As a result, the new total IPO size will include a primary size of Rs 8,300 crore (unchanged) and a secondary of Rs 10,000 crore.
Talking about the unified payments interface (UPI), the Paytm CEO said the platform does not use UPI for all payments.
Commenting on the company’s business, he said, “We are largest payment company by user and merchant transaction. Rs 4 lakh crore GMV in FY21 entails commerce transactions.” Incremental costs are lower than ever before, he said, adding that though EBITDA margin is negative, there has been an improvement.
Sharma further said that the Paytm brand is valued at Rs 47,250 crore and despite the competition, customers and merchants are loyal to the platform.
He also said that Paytm doesn’t and won't give cashback as it wants to run a prudent scalable business. “If merchants give cashbacks, we are happy to do so,” he said.
Meanwhile, Sharma ruled out the possibility of Paytm becoming a non-bank financial institution (NBFC). “Our business model is not about being a credit player,” he said. However, he added that Paytm Payments Bank could apply for a small finance bank license.