India will see its largest-ever IPO, with digital payments giant Paytm aiming to raise over $2.5 billion.

Paytm is funded by Chinese entrepreneur Jack Ma's Ant Group, SoftBank of Japan, and Warren Buffett's Berkshire Hathaway, which hold approximately a third of the firm.

Vijay Shekhar Sharma, the son of a teacher who claims to have learnt English by listening to rock music, launched the company little over ten years ago.
At the age of 38, he was named India's youngest dollar billionaire four years ago, and he currently has a net worth of $2.4 billion, according to Forbes.
With the IPO set to begin on Monday, his roughly 14% ownership will almost certainly make him even wealthier.

According to the prospectus, Paytm will issue new shares worth 83 billion rupees ($1.1 billion), while current owners would sell shares worth $1.34 billion.

With a valuation of $20 billion, Paytm is set to become India's most valuable internet business, up 25% from two years ago.

In a country where cash transactions have historically dominated, the platform was established in 2010 and rapidly became associated with digital payments.

It has benefited from the government's initiatives to reduce cash usage, including the demonetisation of virtually all banknotes in circulation five years ago, as well as COVID.

Naina Thakur, the proprietor of a supermarket store said, “I didn’t know corona (virus pandemic) would happen but Paytm was very useful to me during the pandemic”.

According to Thakur, nearly a third of her clients use Paytm to pay for milk, bread, and other everyday necessities.

She stated, “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”.

Thakur is one of over 22 million Indian store owners, cab and rickshaw drivers, and other vendors that take Paytm's ubiquitous blue-and-white QR code stickers for as little as 10 rupees ($0.13).

According to the company's regulatory filing in July, the platform claimed 114 million active yearly users. The company said it undertook transactions worth more than $54bn in the 2020-21 financial year.

In India, the volume of mobile payments has increased dramatically in the previous four years, with 26 billion transactions expected in 2020-21.

Motilal Oswal, a Mumbai-based financial analysis business, predicts that mobile digital payments in India would reach $3.1 trillion in value by 2026.

Paytm, on the other hand, has been losing money and is unsure if it can ever turn a profit. Last year, it lost 17 billion rupees ($231.6 million) on revenues of roughly 32 billion rupees ($436.1 million).

He cautioned in the prospectus, “we expect to continue to incur net losses for the foreseeable future and we may not achieve profitability in the future”.

Paytm's cash flow has been negative over the past three years, owing to operating losses.

Paytm would beat Coal India's $2 billion IPO in 2010 as India's largest IPO, with a goal of $2.46 billion.

Paytm raised 82.35 billion rupees ($1.1 billion) from 74 anchor investors last week, including BlackRock and the Canada Pension Plan Investment Board.

Paytm will issue shares in a price band of 2,080-2,150 rupees ($27.9-$28.9) in the offering, which is slated to close on Wednesday.

While there was investor enthusiasm for fintechs and startups both in India and worldwide, Hemang Jani, head of equity strategy at brokerage Motilal Oswal Financial Services, said that while there was investor hunger for fintechs and startups both in India and globally, “at some point investors would ask questions about the business model, profitability and cash flows”.

According to data from market analyst Prime Database, Indian firms have raised a total of $9.7 billion through IPOs in 2021, which is a new high.
With its $1.3 billion share offering in July, food delivery firm Zomato was the country's biggest IPO of the year until now.