B2B payments startup PayMate India files DRHP to raise Rs 1500 Cr

Mumbai-based PayMate India, a B2B payments and services provider that digitizes, automates and streamlines business to business payments in supply chains, has filed its Draft Red Herring Prospectus (DRHP) with markets regulator, Securities and Exchange Board of India (SEBI), to raise around Rs 1500 crore through an initial public offering (IPO).

The IPO comprises a fresh issue of Rs 1125 crore and an offer-for-sale (OFS) of Rs 375 crore from its existing shareholders and promoters. 

In the OFS, promoters Ajay Adiseshan and Vishvanathan Subramanian will sell up to Rs 134.73 crore and Rs 3.29 crore respectively. Institutional investor Lightbox Ventures will sell up to Rs 127.38 crore, Mayfield FVCI Ltd. will sell up to Rs 15.66 crore, and RSP India Fund will sell up to Rs 2.74 crore. The offer also includes a reservation for subscription by eligible employees.

As on date of the DRHP filing, the promoter and promoter group held 66.70 percent in the company and the rest was held by public shareholders.

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The proceeds from its fresh issuance worth Rs 77 crore will be utilised for investment for expanding its business into new geographies, Rs 228 crore for pursuing inorganic initiatives, and Rs 688.70 crore for placing cash as collateral with its financial institution partners to improve its margins and general corporate purposes.

PayMate claims to have developed from a consumer-facing to a B2B payments platform since its inception in 2006. It operates in B2B payment services based on digital technologies, with a customer base that spans a wide range of industries, including IT distribution, FMCG, paints, financial services, cement, auto auxiliary, travel and airline, media, manufacturing, and logistics.

It is a multi-payment category platform that incorporates vendor payments, statutory payments, and utility payments, giving its customers a “fully-integrated” B2B payment stack. Crompton Greaves Consumer Electricals Limited, Kansai Nerolac Paints Limited, SBI Cards and Payment Services Limited, and Jay Bharat Maruti Limited are among the 480 enterprises that have subscribed to the enterprise plan on its platform (enterprise customers) to receive payments from their buyers, dealers, and distributors.

The platform also allows consumers and their vendors, suppliers, buyers, dealers, and distributors to use commercial credit cards to make statutory payments of direct taxes and GST, as well as utility payments. 

Visa has a partnership with PayMate. Visa cards accounted for more than 90 percent of commercial credit cards handled through the systems as of December 31, 2021. Visa is also a shareholder in PayMate, owning 2.94 percent of the fully diluted paid-up equity share capital.

The brand launched its platform in the UAE in 2018 through PayMate LLC, its subsidiary in the UAE, as a Visa-certified business payment solution provider. It is also aiming to expand into other parts of the Central Europe, Middle East and Africa (CEMEA) region as well.

As of December 31, 2021, it had 49,953 customers, of which 480 were enterprise customers and 49,473 were small and medium enterprises that subscribed for basic plans on its platform (SME Customers). In terms of transaction processing volume (TPV) processed, it claims to be India's largest B2B payments player and one of the fastest-growing providers of online, card-based payment-processing services, with a TPV of Rs 77,731.45 million in December 2021.

In Fiscal 2021, it completed the merger with Zaitech Technologies, which has enabled it to integrate the credit evaluation and scoring technology of Zaitech Technologies with the payments platform, thereby offering an integrated payments and credit platform. 

ICICI Securities Limited, HSBC Securities and Capital Markets (India) Private Limited, JM Financial Limited and SBI Capital Markets Limited are the lead managers, and Link Intime India Private Limited is the registrar of the offer. The equity shares are proposed to be listed on BSE and NSE.