Good Morning Dear MMS Reader,
If you are still recovering from Zomato’s IPO last week, which, at 26X its revenue, was one of the most expensive issues of its kind, then take a deep breath. India’s largest fintech Paytm’s IPO is at the door—promising and risky in equal parts. The company wishes to be valued at $25-$30 billion, at a multiple of 66-80X its revenue, a way higher multiple than what its lead investor and China’s tech darling Ant Group Co wanted for itself. The latter’s 2020 IPO, scuppered by Chinese regulators, was valued at 17X its 2019 revenue.
But why are we even comparing foodtech and fintech? Or China and India?
It’s all about larger-than-life dreams that Paytm founder nurtured. At an offsite in Agra in 2019, he chided his colleagues for even thinking about selling their shares. He believed each entity in the group could become a $10 billion business. All those who were present got that the bet is on his legacy.
The Paytm CEO has reduced his shareholding from 14.6% to 9.6% just before the IPO, but he’s pretty much the largest shareholder in all other businesses— Paytm Payments Bank, Paytm Life Insurance, Paytm General Insurance. And along with 32 subsidiaries and nine associates, Paytm is a maze with its attendant problem: the double-edged sword of related party transactions.
While it’s a feature of Indian corporate structures, in the digital business context, this begs the question—where does the real value lie between Paytm and its constellation?
Today's articles on subject matters: “The prospectus only spews headline numbers on how big different parts of its business are. Without a sense of how these products grew, it’s hard for investors to fathom Paytm’s growth trajectory. At best, the numbers become spitballs.” One may look at Paytm’s smaller competitor Mobikwik which has shared far more numbers in its recent IPO prospectus. But then one also has Reliance and real estate giant DLF to compare Paytm with...
Yusuf Bhandarkar - 7977231537
