Founder says he aims to convert the payments bank into a small finance bank after it completes five years
IPO is not even a logical discussion now and that’s not what investors have come in for, says Sharma
Paytm founder Vijay Shekhar Sharma on Wednesday said he was not interested in buying a stake in Yes Bank and denied having had any talks with the founder of the private sector lender, Rana Kapoor. Sharma. Sharma instead aims to convert Paytm into a small finance bank (SFB) after it completes five years as a payments bank.
“It wasn’t confirmed or correct. If we as a group have a bank and, I as a chair of the bank, own 51% of the bank, it sounds too far-fetched for an individual or company (to pick up Kapoor’s stake)," he said in an interview.
Sharma also said that the payments firm, one of India’s most valued startups at $16 billion, wants to remain private for a long time.
“IPO is not even a logical discussion now and that’s not what investors have come in for. We are an Indian company. I would rather stay private and try to become profitable," he said.
In an earlier interview, Sharma had said that he would look at an IPO from 2022 after the company starts generating cash. In November last year, Paytm had raised nearly $1 billion from investors, including Japan’s SoftBank Group and China’s Ant Financial, in what could be the final round of private funding for the company. The fundraising had lifted Paytm’s valuation to $16 billion, up from $15 billion in August, when some of its employees had cashed out their shares in a secondary sale to unnamed New York-based investors. Much of the $1 billion raised will be used to expand the merchant payments business and acquire customers for the bank and KYC.
Sharma was in Mumbai to launch the All-In-One QR for merchants, which will enable them to accept unlimited payments through Paytm Wallet and, Rupay Cards and all UPI-based payment apps, directly into their bank account at 0% fee. He said the new product will help add 10 million merchants to the 15 million merchants, who are already on board.
He said the company can offer a lot more once it is upgraded to an SFB. The payments bank has been profitable over the last 2 years and has added 50 million customers so far. He was also open to the idea of a universal bank if the Reserve Bank of India allowed it.
Sharma also elaborated on the company’s plans to go international following its foray into Japan. “In Japan, we did 22 million customers in one year. Japan has 135 million people and India has 1.3 billion. On a multiple of 10x, standalone it is bigger than everybody’s payment business combined in the country," he said. “However, we remain focused on India. We will go international for sure. We may just have some plan going on."
Sharma clarified that he would like to build the business rather than acquiring another firm, unless he finds something interesting.
Paytm’s losses for 2018-19 nearly tripled to ₹4,217.20 crore from ₹1,604.34 crore in the year-ago period, according to the Noida-based firm’s annual report.
Indian fintech startups are bracing for a relatively tough 2020, underlined by competition and consolidation, despite a funding boom that indicates surging interest in the space.
Fintech startups raised a record $1.47 billion in venture capital in 2019 across 118 deals, compared with $826 million across 106 deals in 2018, according to data tracker Venture Intelligence. Startups are firms that are less than 10 years old.