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September 2, 2021

Paytm to set up subsidiary to run payment aggregator business

By Johney Amala

Indian payment firm Paytm is looking to transfer its payment aggregator business to a new subsidiary, Paytm Payments Services.

The move comes as the deadline to adhere to the payment aggregator rules mandated by the Reserve Bank of India’s (RBI) closes by.

RBI has directed payment aggregators to be operated as a separate company after obtaining a licence from the central bank, effective January 2022.

Paytm will seek approval from its shareholders to form the new subsidiary in an extraordinary general meeting later this month.

According to a notice sent to its shareholders by the firm, the transfer will have an indicative book value between $39m to $50m.

The firm plans to pay the amount in five equal annual instalments.

Meanwhile, Paytm is also preparing for its stock market debut.

In July 2021, the firm filed a draft prospectus for its $2.2bn initial public offering (IPO) with the Securities and Exchange Board of India.

It is expected to announce the IPO date once it is granted approval by the market regulator.

As part of the IPO, Paytm plans to raise $1.1bn through the issue of new shares and the rest through an offer sale.

According to a recent filing with SEBI, the firm will use the fresh capital of $577m to further expand its payments services offering.

It also plans to utilise about $269m to propel expansion into new initiatives and explore acquisition opportunities.

Founded by Vijay Shekhar Sharma in 2009, Paytm allows users to make digital payments from their phones and top-up credit.

In addition to digital payments, the firm provides services such as banking, credit cards, financial services, wealth management, and digital wallets.

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