Fintech firm PayMate plans to raise pre-IPO funding round, to turn Ebitda positive by Q3FY24

Business-to-Business (B2B) fintech solutions firm PayMate is in talks with existing and new investors to raise a pre-IPO funding round to fuel its working capital and expansion needs.

“We are doing a pre-IPO fundraising, there is also interest from investors both new and existing…We are going IPO that is inbound but we might raise a round pre-IPO to fuel our working capital needs,” Ajay Adiseshan, founder and managing director of PayMate told Moneycontrol.

The firm planned to raise a fresh issue of Rs 1,125 crore and an offer of sale of up to Rs 375 crore from its existing shareholders and promoters. The firm plans to raise not more than $30 million from the pre-IPO round.

“As per regulations we can raise up to $30 million or 30 percent of our primary IPO raise and we will be raising around that amount, the talks are on with investors and we are in the early stages of discussion,” Adiseshan said.

PayMate planned to go public in 2022 however, the Securities Exchange Board of India (SEBI) asked the firm to refile its draft papers after securing its Payment Aggregator licence from the Reserve Bank of India (RBI).

“There are live discussions happening every now and then with RBI, while there is no concrete timeline on mind, we are confident that things are moving in the right way,” Adiseshan said.

Founded in 2006 by Adiseshan, PayMate focuses on B2B payments for enterprises and SMEs across supply chains. The firm’s founder Adiseshan is a technology entrepreneur who founded and grew Coruscant Tec.

Mumbai-based PayMate is backed by top global card network Visa and other investors like LightBox, Mayfield Fund, Brand Capital and Recruit Strategic Partners.

PayMate in Numbers

The current total addressable market (TAM) in India for PayMate is about $8 trillion and it will go up to $11 trillion by 2026.

“We have grown from 3 billion of transaction processing volume in 2021 to around 11 billion as of FY23, around 3X growth,” said Adiseshan.

In terms of revenues, PayMate grew from about $46 million in FY21 and $146 million in FY22 to about $180 million in FY23.

“Our enterprise clients have gone up from 570 in FY22 to about 1,700 in 2023. Even the small businesses have gone up from 73,000 to 190,000 in 2023,” Adiseshan said.

While the firm’s revenues have gone up, its losses have widened from $2 million in  FY21 to around $3 million in FY23. However, Adiseshan said that PayMate will be looking at Ebitda profitability by Q3 of FY24.

“We will be turning Ebitda positive by Q3 of FY24…As we scale our costs don’t go up disproportionately, we are extremely cost conscious and we run the whole operations with about 100 employees,”he added.

Expansion Plans

The total addressable market (TAM) of commercial payments is about $135 trillion and India is about $8 trillion, 6 percent of the Global TAM. PayMate has started expanding globally by starting with GCC (The Cooperation Council for the Arab States of the Gulf)  customers in UAE and some adjacent countries.

“We have recently also kicked off in APAC, we will be going live mostly by the end of this quarter and this is a $50 trillion market,” he said.

The company said that it is looking to expand inorganically. In 2018, Mumbai-based B2B payments company PayMate announced the acquisition of micro-lending institution Zaitech Technology.

“Cross-border payments have been the clear focus and our growth strategy would be inorganic expansion. We are looking to make acquisitions both in India and the newer geographies we are entering,” Adiseshan said.

(Note: The copy has been updated with FY22 numbers of PayMate, based on clarification sent by the company)