One97 taps IPO market in new, bigger avatar 11 years after aborted attempt

One97 taps IPO market in new, bigger avatar 11 years after aborted attempt

Vijay Shekar Sharmas almost went public in 2010. It had even announced the issue date, but postponed listing plans at the last minute due to volatile market conditions.

That year, there were 64 initial public offerings (IPOs) worth nearly Rs 38,000 crore. One97’s would have added to the number but would hardly have made a difference to the amount raised column as the issue size was only Rs 120 crore. In the same year, India saw its largest still date – Rs 15,200 issuance by state-owned Coal India.

Fast forward 11 years, One97 Communication – the company that owns Paytm, pioneer of digital payments – is all set to surpass Coal India’s record with its Rs 16,600 crore

One97, which is backed by SoftBank, Berkshire Hathaway and Ant Group, expects IPO valuations of around Rs 1.85 trillion. In 2010, the company, which operated as a mobile value-added services (VAS) player, was valued at less than Rs 500 crore.

The jump in valuations is the result of Paytm’s metamorphosis from a largely caller support provider to a state-of-the-art digital payment provider.

According to the DRHP filed in 2010, the company’s net worth was only Rs 140 crore. The total income for the year ended March 2010 was Rs 119 crore and had a net profit of Rs 16 crore. At the end of March 2021, Paytm’s net worth was Rs 6,535 crore and the total income was Rs 3,187 crore. The company’s balance sheet has grown many times over over the past ten years. Net worth remains relatively modest as the company has incurred huge losses in an effort to pursue growth by acquiring new customers and merchants.

Prior to the IPO, Paytm made efforts to reduce losses. In FY21, the total loss was Rs 1,701 crore, 60 percent lower than Rs 4,230 crore reported in FY19 and 42 percent lower than Rs 2,942 crore in FY20. This has been achieved in part by reducing marketing costs from Rs 3,408 crore in FY19 to Rs 532 crore in FY21.

Paytm – short for mobile payment – started this journey with the launch of a service to top up mobile phones and pay other utility bills. The explosion in smartphone usage and the government’s decision to demonetize Rs 500 and Rs 1,000 banknotes in November 2016 are seen as key growth drivers for Paytm. After the move, the company aggressively added new customers and sellers. Currently, it is the largest payment platform in the country with 333 million customers and 21 million merchants.

More recently, Paytm has offered a full suite of financial services including brokerage, mutual funds (MF), insurance and wealth management through its entire arm Paytm Money.

Paytm Money offers no commission, direct investment in MF schemes According to the offering document, it has more than 1.3 million MF consumers. As for the brokerage, it processed 208,000 trading accounts on March 31.

The 2010 IPO prospectus offers few hints of current Paytm.

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