India's Paytm to start trading after $2.5bn IPO

Company's success has turned Vijay Shekhar Sharma, who founded Paytm in 2010, into a billionaire with a net worth of $2.4bn

The interface of Indian payments app Paytm. The company will start trading on Thursday after a successful IPO. Reuters
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Indian digital payments company Paytm is set to make its stock market debut on Thursday, after its $2.5 billion initial public offering (IPO), the country's largest, was oversubscribed last week.

Paytm, which counts China's Ant Group and SoftBank among its backers, raised $1.1bn from institutional investors and last week received $2.64bn worth of bids for the remaining shares on offer, or 1.89 times.

The company, headquartered on the outskirts of India's capital New Delhi, has priced its 85.1 million-share issue at the top of the range at 2,150 rupees ($28.92) each. It had flagged a price range of 2,080-2,150 rupees per share for the deal.

Some market analysts said they expected the shares to nudge higher on their debut despite Paytm's expensive valuation.

Engineering graduate Vijay Shekhar Sharma founded Paytm in 2010 as a platform for mobile recharges. The company grew quickly after ride-hailing firm Uber listed it as a quick payment option in India and its use swelled further in late 2016 when New Delhi's shock ban on high-value currency notes boosted digital payments.

Paytm's success has turned Mr Sharma into a billionaire, with a net worth of $2.4bn according to Forbes. Its IPO has also minted hundreds of new millionaires in a country where per capita income is below $2,000.

At 27, Mr Sharma was making 10,000 rupees ($134.30) a month, a modest salary that did not help his marriage prospects.

"In 2004-05, my father asked me to shut my company and take up a job even if it was for 30,000 rupees," Mr Sharma, who went on to found the digital payments firm, told Reuters.

At the time, the trained engineer sold mobile content via a small company.

"Families of prospective brides would never call us back after finding out that I earn around 10,000 rupees a month," Sharma said. "I had become an ineligible bachelor for my family."

Last week, 43-year-old Mr Sharma led Paytm's $2.5 billion IPO. The fintech firm has become the toast of a new India, where the first-generation of the country's startups are making stellar stock market debuts and minting new millionaires.

Paytm founder and CEO Vijay Shekhar Sharma poses for a picture at a clubhouse of a residential building in New Delhi. Reuters

Born to a school teacher father and a home maker mother in a small city in India's most populous Uttar Pradesh state, Mr Sharma, who became India's youngest billionaire in 2017, still loves having tea at a roadside cart and often takes short morning walks to buy milk and bread.

"For a long time my parents had no idea what their son was doing," Mr Sharma said of the time China's Ant Group first invested in Paytm in 2015. "Once my mother read about my net worth in a Hindi newspaper and asked me, 'Vijay do you really have the kind of money they say you have?'"

Paytm began just over a decade ago as a mobile recharge company and grew quickly after ride-hailing firm Uber listed it as a quick payment option in India. Its use leapfrogged in 2016 when India's shock ban on high-value currency notes boosted digital payments.

Paytm, which also counts SoftBank and Berkshire Hathaway as its backers, has since branched out into services including insurance and gold sales, movie and flight ticketing, and bank deposits and remittances.

While Paytm pioneered digital payments in India, the space soon became crowded as Google, Amazon, WhatsApp and Walmart's PhonePe launched payment services to grab a slice of a market expected to grow to more than $95.29 trillion by the end of March 2025, according to EY.

That push by global giants gave Mr Sharma a rare moment of doubt, which he raised with SoftBank's tycoon billionaire founder Masayoshi Son.

"I called up Masa and said - now everyone's here, what do you think are my odds?"

Mr Son, an early investor in Yahoo! and Alibaba, told Mr Sharma to "raise more money, double down and go all in" and focus all his energy on building payments, unlike rivals which had other primary businesses.

Mr Sharma, who is married and has a son, said he has not looked backed since.

While some market analysts have concerns over when Paytm will turn profitable, Mr Sharma is confident of his company's success.

In 2017, Paytm launched a bill payments app in Canada and a year later entered Japan with a mobile wallet.

"My dream is to take the Paytm flag to San Francisco, New York, London, Hong Kong and Tokyo. And when people see it they say - you know what, that's an Indian company," Mr Sharma said.

Updated: November 18, 2021, 5:46 AM