India's biggest IPO will be born! Marson Justice Buffett is a shareholder

If Ali spawned India's biggest IPO to date, it wouldn't be an exaggeration. In the middle, the former only took about 10 years.

According to public information, Indian digital payments company Paytm has been approved for listing, and if nothing else, this will be the largest IPO in India's history, with the company planning to raise $2.2 billion to issue up to Rs 83 billion (about $1.1 billion) of new shares, and the company will also offer to existing shareholders such as SoftBank and Berkshire Hathaway to sell shares worth Rs 83 billion.

Paytm said the financing was mainly used to strengthen its payment system, as well as new business projects and acquisitions.

333 million registered users, nearly 30% owned by Ant Group

It is understood that founded in 2009, Paytm is not only regarded as the "Indian version of Alipay", but also known as "India's first and the world's third largest e-wallet".

According to the prospectus, as of March 2021, Paytm has 333 million registered users – nearly half of India's Internet users, covering 20 million merchants.

As of now, Paytm is still in the red, with its parent company One97 having total revenue of Rs.318 crore in 2020, representing a loss of about Rs.16 billion ($200 million). Net loss for the first quarter of 2021 was Rs.1,606 crore and revenue was Rs.2,802 crore, down 14.6% year-on-year. Its operating loss narrowed to Rs.16,550 crore for the financial year ending March 2021 to Rs.16,550 crore with 114 million trading users for a total of 7.4 billion transactions for the financial year.

However, foreign media quoted people familiar with the matter as saying that Paytm may achieve breakeven in the next 18 months.

At present, Paytm has financial businesses including insurance, stock trading, etc. According to the company's expectations in the prospectus, the scale of online games, online ticketing, food delivery and so on in India will expand at a growth rate of more than 30% per year in the next 5 years, which is enough to benefit Paytm's future development.

The development of Paytm is undoubtedly inseparable from Alibaba. Investors in Paytm's parent company, One97, are said to have emailed Ma, with the former believing that Paytm's business model was similar to Alipay's, and then Paytm's founder Vijay B. Vijay Shekhar Sharma was invited to Hangzhou to communicate with Jack Ma, Jing Xiandong and others.

As is well known, Ant Group invested in Paytm several times, the first investment occurred in 2015, and in a round of financing in 2017, Ant Group held up to 60%, and in that time period, Paytm was more like an Indian branch of Ant Group in India than an Indian company.

According to the prospectus, AntFin (Netherlands) Holding B.V. of Ant Group held 29.6% of the shares before the IPO, Alibaba indirectly held 7.2%, SVF India Holdings (Cayman) Limited held 18.3%, SAIF III Mauritius Company Limited held 12.1%, and the founders held 9.6%. In addition to Alibaba, Berkshire Hathaway and SoftBank are shareholders of Paytm.

However, according to Indian regulations, in the process of Paytm's listing, Alibaba may need to reduce its stake by about 5% to meet the relevant regulations that India's foreign-invested listed companies hold less than 25%.

"Working with Ant Group is like taking an MBA program"

Founder Vijay once said: "In India itself, we still see the disparity between rich and poor. India's population is already catching up with China, and the proportion of rural population is high. Many people have never even seen a bank, let alone used financial services. We want to make such a mobile terminal-based tool, so that hard-working people have an account to be able to place their property, no longer worry about receiving fake money when they work odd jobs, and can transfer money to their families anytime and anywhere. ”

But before Vijay founded Paytm, she was already a small and successful serial entrepreneur. While still studying in 1997, he founded a website indiasite.net, which sold for $1 million two years later.

Later, in 2000, Vijay founded One97, the parent company of Paytm, which, interestingly, is said to have initially provided constellation divination services, and later expanded to provide consulting services such as telephone ringtones to telecom operators. In 2007, the company also received a total of $5 million in investment from SAIF capital (SAIF) and Silicon Valley Bank (SVB), and was even ready to go public at one point.

In July 2010, the first generation of Apple's iPhone came on the market, which gave Vijay a sniff of mobile Internet opportunities. In August, One97 launched Paytm, fully known as Pay through mobile.

Vijay has a high opinion of Jack Ma and Alibaba, saying in a Caixin report that "cooperation with Ant Group is like taking an MBA course"; Vijay also regards Ant Group's capital injection as one of the biggest impacts on Paytm.

According to a Pew survey, the smartphone penetration rate in India is currently only 17%, in China this figure is 58%, and the Indian population has reached 1.38 billion. Canalys recently reported that Because a number of manufacturers are in the dilemma of lagging supply of low-end models, India's smartphone shipments in the third quarter of 2021 were 47.5 million units, down 5% year-on-year.

In addition, in addition to Paytm, the strength of Indian digital payment company PhonePe should not be underestimated. PhonePe India's total expenditure for the financial year ending in FY2021 was Rs.2456 crore, which was 11 per cent higher than the annual cost of Rs.2203 crore in FY2020.

India is undoubtedly a huge market, and since the government launched the money-scrapping campaign, mobile payments have been a big cake that the entire Indian market cannot ignore – a trillion-dollar market. The development of Paytm after its listing and the penetration of Indian netizens may be more worthy of attention.

Editor: Li Mingzhu