Also in this letter:
- ‘Undeclared emergency’ in India, says Justice Srikrishna
- Banks warn crypto investors of penalties
- Zerodha’s profit more than doubled in FY21
Alibaba, Softbank could dilute Paytm stakes before IPO
Paytm’s board has approved a resolution for its proposed initial public offering (IPO) before November, several sources told us.
Details: The company plans to file for the IPO by July. It is also evaluating a secondary share sale that could reduce the stakes of existing investors before the IPO.
The details are not final but this share sale could include its largest investors, such as China’s Alibaba Group, Japan’s SoftBank and venture capital firm Elevation Capital.
According to a Bloomberg report, Paytm is seeking a valuation of $25-$30 billion.
Quote: “Paytm wants to put 10% of shares on the block, which would be around $3 billion. The company will evaluate whether it has to make a secondary transaction and will offer it on a pro-rata basis to each of its investors. It is working out the contours, but in the last five years, none of its significant shareholders have expressed intent to exit,” said a person directly aware of the plan.
How’s business? Paytm’s core business—payments—is growing, and the company is also expanding into financial services. Verticals such as online ticketing for travel and movies have, however, been badly hit by the pandemic.
- Though audited numbers for the financial year 2021 have not yet been made public, the company is expected to record a loss for an eighth consecutive fiscal year. Revenue is also likely to take a hit.
- In FY20, Paytm’s consolidated revenue was flat at Rs 3,280 crore, while it cut losses by 30% to Rs 2,942 crore, according to its annual report.
- Paytm has ambitious plans to build its lending business and has brought on board Amit Nayyar as president and Bhavesh Gupta as chief executive of Paytm Lending.
Get in line: Several other Indian startups have planned IPOs over the coming months. Zomato is expected to be the first to go public, and aims to raise $1.1 billion.
Delhivery bags another Rs 2,000 crore: Meanwhile, logistics startup Delhivery, which is also planning an IPO next year, has raised around $277 million (over Rs 2,000 crore). The funding round was led by Fidelity and also included Singapore’s sovereign wealth fund GIC. Scotland’s Baillie Gifford and Abu-Dhabi-based fund Chimera came in as new investors.
Details: Fidelity invested around $125 million while GIC put in around $75 million.
- Delhivery’s valuation is now almost $3 billion, from a little over $2 billion in December, after a secondary investment from Steadview Capital.
Sources said this could be Delhivery’s last major fundraise before it goes public, even though the filing did not explicitly say so. The company is looking to raise $650-$800 million from the public listing at a valuation of around $4 billion.
Also Read: A decade of Delhivery
Govt actions constitute ‘undeclared emergency’: Justice
The government is “trying to make inroads into the fundamental right of privacy” by ordering social media platforms such as WhatsApp to enable traceability of messages under its new IT rules, BN Srikrishna, retired Judge of the Supreme Court, told ET.
- The demand is not legal unless it is backed by legislation passed by Parliament, he said.
He describes recent developments — the face-off between the central government and social media platforms such as Twitter and WhatsApp over the new IT rules, and other attempts to gag voices critical of the government — as an “undeclared emergency”.
- “I still think it is a free country but I am getting more and more doubtful about it,” he added.
Srikrishna chaired the committee that drafted the Personal Data Protection (PDP) Bill, which was submitted to the government in July 2018 and is yet to be turned into law.
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Banks warn crypto investors they could lose their accounts
Leading Indian banks are clamping down on customers using their bank accounts for
- Over the past few months, HDFC Bank and State Bank of India – to name just two – have sent official notices to many customers warning them of repercussions for doing so—including permanent closure of their accounts.
Citing overturned RBI circular: Both these lenders have cited the Reserve Bank of India’s past public notifications—including the November 2018 circular that banned banks from facilitating crypto transactions. This circular was struck down by the Supreme Court in February 2020.
Earlier this month, we had reported that payment gateways have been blocking cryptocurrency exchanges’ transactions on the orders of banks.
Also Read: ICICI Bank shuts out crypto trades
Zerodha’s profit more than doubled in FY21
Zerodha’s profit has more than doubled to Rs 1,000 crore in FY21 from a year ago, chief executive Nithin Kamath tweeted on Sunday.
In FY20, the online stockbroker had reported a profit of Rs 440 crore, backed by a robust 15% growth in revenue to Rs 1,093 crore. The company had posted profits of Rs 350 crore and Rs 250 crore in FY19 and FY18, respectively.
Catching up: Kamath, who founded
Paytm is expected to make losses for an eighth consecutive fiscal year in FY21, though the losses are expected to be lower than in the previous year.
Runaway Aurora filter is the new black
Hundreds of AR filters and visual effects are uploaded on short-video platforms such as Instagram daily. While some of them click, others fade into oblivion.
What’s different this time? Runaway Aurora is that rare filter that has not only become wildly popular on Indian social media, it has also led to an unusual breakthrough for many creators in the past few weeks.
A meme is born: Many Instagrammers have made parodies using the filter, turning it into a meme. Psychologists say it’s not a coincidence that the filter has gained unusual popularity on Instagram in India at a time when Twitter is flooded with SOS posts for Covid-related aid.
Inside IIT Madras’ deep-tech startup incubator
The Indian Institute of Technology, Madras, has become the de facto destination for deep-tech research in India.
- The success of IIT Madras is not by chance but by design, said Kris (S) Gopalakrishnan, co-founder of Infosys and an alumnus of IIT Madras.
The IIT-Madras Incubation Cell has birthed successful deep-tech startups including artificial intelligence firm Uniphore Software Solutions, electric vehicles maker Ather Energy, Internet of Things (IoT) startup Stellapps and space technology firm Agnikul.
By the numbers:
- IIT-Madras has incubated 240 startups. Of these, 25% have raised capital from investors and venture capitalists.
- These firms represent Rs 10,500 crore in value, based on their last available funding data, IIT Madras said.
- Over 10% of these firms are now founded by women entrepreneurs.
Top Stories We Are Covering
Wipro sells its entire stake in Ensono: Wipro has sold its entire stake in IT services provider Ensono for $76.24 million as part of the Illinois-based company’s acquisition by private equity giant KKR which was announced in April. Meanwhile, Wipro Aerospace’s US unit has bid to acquire the assets of Boeing supplier TECT Aerospace Group Holdings for $31 million, documents filed with a US bankruptcy court showed. The bid, if successful, will help Wipro Aerospace bag more orders to supply systems and components for the Boeing 737 aircraft programme.
AI, ML to drive digital healthcare management: The India team at medical technology firm Wipro GE Healthcare is working on a range of artificial intelligence (AI) and machine-based digital healthcare solutions to cater to the world, managing director Shravan Subramanyam said.
Google, Facebook website update in India: Large digital companies like Google and Facebook have begun updating their websites to reflect the appointment of the grievance officers under the new social media rules that came into effect recently.
Global Picks We Are Reading
■ Why on Earth did Amazon spend $8 billion on a zombie studio? (The Verge)
■ Buying a pink NFT cat was a crypto nightmare (BBC)
■ A worker-owned cooperative tries to compete with Uber and Lyft (NYT)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai.