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paytm: Mobile payment company Paytm launches India’s largest IPO

MUMBAI: India’s largest IPO ever opened on Monday with the digital payment platform Paytm, which wants to raise almost $ 2.5 billion, in what has already been a record year for stock quotes.
Paytm is backed by Chinese tycoon Jack Ma’s Ant Group, Japanese SoftBank and Warren Buffett’s Berkshire Hathaway, which together own about a third of the company.
The company was founded almost a decade ago by Vijay Shekhar Sharma, the son of a schoolteacher who says he learned English by listening to rock music.
He was ranked as India’s youngest dollar billionaire four years ago at the age of 38 and now has a net worth of $ 2.4 billion, according to Forbes. He owns a stake of almost 1[ads1]4 percent.
Paytm issued new shares worth 83 billion rupees ($ 1.1 billion), with existing shareholders selling shares worth $ 1.34 billion, according to the prospectus.
The IPO is expected to make Paytm India’s most valuable technology company with a value of 20 billion dollars, up 25 percent from two years ago.
The platform was launched in 2010 and quickly became synonymous with digital payments in a country that is traditionally dominated by cash transactions.
It has benefited from the government’s efforts to curb the use of cash – including the demonetization of almost all banknotes in circulation five years ago – and most recently, from Covid.
“I did not know the corona would happen, but Paytm was very helpful to me during the pandemic,” Mumbai grocery store owner Naina Thakur told AFP.
Thakur said that about a third of her customers pay her for milk, bread and other daily groceries via Paytm.
“It’s much easier than a bank transfer because they only need my mobile number to pay and I get the settlement within seven hours,” she said.
Thakur is one of nearly 22 million Indian store owners, taxi and rickshaw drivers and other vendors who accept payments as low as 10 rupees ($ 0.13) using Paytm’s ubiquitous blue and white QR code stickers.
The platform had 337 million customers at the end of June, according to the company’s regulatory registration. In 2020-21, it made transactions worth more than $ 54 billion.
The number of mobile payments in India has skyrocketed, accounting for 26 billion transactions in the financial year 2020-21.
Mumbai-based financial analysis firm Motilal Oswal estimates that mobile digital payments will exceed $ 3.1 trillion in value by 2026.
Foreign giants have also tried to take part in the cake, including Google and Amazon. Another major player is PhonePe, owned by Flipkart in which the American retail giant Walmart owns a majority stake.
But Paytm has had continuous losses and is not sure when it will make money. It reported a net loss of 17 billion rupees last year on revenues of almost 32 billion rupees.
“We expect to continue to incur net losses in the foreseeable future, and we cannot achieve profitability in the future,” warns the prospect.
Paytm has reported negative cash flows over the past three years, primarily due to operating losses.
With a target of $ 2.46 billion, Paytm would surpass Coal India’s $ 2 billion issue in 2010 to become India’s largest IPO.
Prior to the offer, Paytm raised 82.35 billion rupees from 74 anchor investors, including BlackRock and the Canada Pension Plan Investment Board last week.
Paytm will issue shares in a price range of 2,080-2,150 rupees in the offer, which is scheduled to end on Wednesday.
Indian companies have raised a record $ 9.7 billion through IPOs in 2021 so far, figures from market monitor Prime Database showed.
Food delivery giant Zomato was the country’s largest IPO this year to date with its $ 1.3 billion share issue in July.
This year, India has also seen a record number of unicorns set up – start-ups worth $ 1 billion or more – taking advantage of investors intimidated by an attack on technology giants in China.

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