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A closer look at Paytm’s (formerly) USD 20 billion empire | India Digest Volume 75

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This week was all about Paytm’s public market debut, which was expected to be sensational but turned out…blah. Before Paytm founder and CEO Vijay Shekhar Sharma rang the bell at the 146-year-old BSE, Asia’s oldest stock exchange, he became emotional, and while wiping his tears he said he didn’t believe he could reach here.

Sharma concluded Paytm’s USD 2.47 billion IPO—the country’s largest-ever—last week with an oversubscription of 1.89 times. But when it listed on November 18, shares of SoftBank- and Ant Financial-backed fintech giant opened up at a discount of 9% over the issue price on Indian bourses.

More importantly, Paytm debuted with a market cap of USD 13.6 billion (INR 1.01 trillion), almost a USD 6 billion drop from the USD 20 billion valuation that the company reached after the IPO.

For this week’s big read, we looked at different verticals that Paytm ventured into over the years to create a massive business enterprise.

The Big Read

A closer look at Paytm’s (formerly) USD 20 billion empire

Paytm founder and CEO Vijay Shekhar Sharma incorporated Paytm in 2009 as a digital payments platform offering bill payments and mobile top-ups.

Twelve years down the line, the company has grown into a sprawling empire comprising payment services for consumers and merchants, ticket and event bookings, games, insurance, financial and wealth management products, stock trading, and commerce.

Even as profitability remains a few years away for the company, Paytm has been tapping different revenue channels since 2015, the year when it forayed into the online commerce segment.

As per its prospectus, Paytm derives revenues primarily from fees earned from merchants for payments, commerce and cloud, and financial services. KrASIA looked at regulatory filings to chart out how Paytm has diversified its business in a bid to milk its 337 million registered users and 21.8 million merchant partners.

The Weekly Buzz

1. Indian fintech giant Paytm made a weak debut, with share price crashing 27% on listing day. The Noida-headquartered company listed its shares on stock exchanges on November 18 at a discount of over 9% against the issue price of INR 2,150. By the end of the day, Paytm’s shares were down to an intraday low of INR 1,564 and INR 1,560 on BSE and NSE, respectively. However, given the massive issue size, Paytm’s market capitalization still crossed INR 1.01 trillion (USD 13.6 billion).

2. Indian market regulator SEBI proposes new rules to avoid misuse of IPO funds. The development comes at a time when a string of high-profile startups are opting to go public in India and receiving attention from the global investor community. In a recently floated consultation paper, SEBI proposed to put a cap on IPO funds that startups can use for mergers and acquisitions (M&As) unless they explicitly identify takeover targets when filing the offer document.

3. Days after bumper market debut, lifestyle retailer Nykaa posted fall in net profit for Q3 2021. The USD 14 billion-plus company posted a whopping drop of 95% in net profit to INR 12 million in Q3 of 2021 from INR 270 million in the corresponding quarter last year. Nykaa’s revenue from operations in the quarter ended September 2021 stood at INR 8.85 billion, growing 47% compared to the same period the previous year and 8% over the last quarter.

4. SoftBank may invest up to USD 10 billion in Indian startups in 2022 if the Japanese conglomerate finds the right opportunities at the right valuation, said Rajeev Misra, chief executive officer of SoftBank Investment Advisers, during an event organized by Bloomberg. This would be a further step up in SoftBank’s investment play in India, where it has already invested about USD 3 billion in 2021 so far.

Q&A Of The Week

3 thoughts on India’s climate tech ecosystem from William Bao Bean of SOSV

New Jersey-headquartered SOSV—the early-stage VC firm behind accelerators like HAX, IndieBio, Chinaccelerator, MOX, and dlab—is an investor in roughly 150 climate tech startups around the world. SOSV has emerged as the most active investor in climate tech globally since last year, having done 47 deals between January 2020 and August 2021, according to PitchBook.

In an interview with KrASIA, William Bao Bean, general partner at SOSV, said the firm invests in 20 to 25 companies each year in India. He expects around five of them will have a positive climate impact. Currently, SOSV is backing climate tech solutions across sectors like transport, supply chain, logistics, and agritech in India.

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