Investors are anticipating that PayPay might reach a valuation surpassing Y3tn ($20bn) as SoftBank gears up for a potential initial public offering (IPO) of the Japanese payment application in the US, possibly as soon as December, reported Reuters, citing sources.
According to sources, the ongoing discussions with institutional investors started in mid-September regarding the IPO valuation.
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While a valuation of Y2tn is considered a starting point, expectations are that the final figure could exceed Y3tn, sourced added.
The Japanese payment firm has not issued any comments on the matter, stated the media outlet.
The sources emphasised that the discussions are ongoing and that any decisions, including the valuation, are dependent on the prevailing market conditions at the time of the IPO.
The current valuation estimates are largely based on the growth of PayPay’s operations within Japan.
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By GlobalDataHowever, investors are also said to be considering the company’s potential for international expansion, which could justify a higher valuation.
PayPay recently announced that its users would be able to make payments overseas, starting with South Korea.
In August, the news agency reported that SoftBank had appointed investment banks for the potential IPO.
The telecom arm of SoftBank reported an increase in its operating profit for its financial segment, which includes PayPay, with profits more than doubling to Y18.1bn in the April-June quarter.
According to a source, “The key focus going forward will be to what extent overseas expansion can be realistically pictured as a growth story, given the lack of business foundations not only in the US but also in Asia.”
PayPay is also enhancing its cryptocurrency offerings, having recently acquired a 40% stake in the Japanese operations of Binance, with plans to introduce new cryptocurrency services.
Ownership of PayPay is divided among several SoftBank affiliates, including the wireless carrier SoftBank Corp, the Vision Fund investment arm, and LY Corp, a joint venture between Naver Corp and SoftBank.
