Paytm will likely use some IPO funds to add more small and medium-sized merchants, particularly in India's 10 largest cities, according to Kristine Lau, associate at ThirdBridge, a research firm.
#PAYTM PAYTM APP DRIVER#
Investment in point-of-sales devices has been a key growth driver for Paytm, as the company moved into the space earlier than its rivals, according to Pranav Bhavsar, founder of equity research company ASA Capital.
The pandemic has helped drive use of payment platforms in India. The company had 21.8 million merchants on its platform as of June 30, 2021, up from 11.2 million on March 31, 2019, according to the IPO filing. Paytm declined to comment for this story, citing the IPO. Paytm also "captures greater value in the payment transaction chain than its rivals as its payment offerings are wider," Nariyanuri said.
"Merchant arrangements can be stickier if you provide value," said Sampath Sharma Nariyanuri, an analyst at S&P Global Market Intelligence. The drive, which included the introduction of smart payment devices in 2019, helped merchant transactions via the Paytm app surge more than 100% from a year earlier to about 1.5 trillion rupees in the March quarter. India's third-biggest payment provider has targeted small businesses to fuel growth - in contrast to PhonePe's and Google Pay's consumer focus - taking advantage of a sector offering lower churn and marketing costs. Shares opened at 1,950 rupees on the National Stock Exchange, a 9% discount on the 2,150 rupees per share offer price, before falling further amid concerns that the IPO was overpriced. sold 83 billion rupees of new shares, with existing shareholders offering another 100 billion rupees of old stock. The Indian payments startup backed by Alibaba Group Holding Ltd., Berkshire Hathaway Inc. plans to spend 43 billion rupees of the sale proceeds on attracting more merchants and another 20 billion rupees on new initiatives, partnerships and acquisitions, according to the IPO prospectus. and Alphabet Inc.'s Google Pay, after raising $2.47 billion in India's biggest-ever IPO. Paytm's parent will seek to step up competition with PhonePe Pvt.