Paytm IPO will be a big event for SoftBank, says Masayoshi Son

SoftBank Group CEO Masayoshi Son

Fintech firm Paytm's billion-dollar share sale will be a big event for SoftBank, its large Japanese investor which has backed it across rounds, SoftBank chief Masayoshi Son said in an earnings call on November 8.

While its valuation of $20 billion makes Paytm among India's largest internet companies, it is still less than the $25 - $30 billion expectation that was rumoured for months leading up to the initial public offering (IPO).

When asked about the supposedly lower valuation, "I believe Paytm and its valuation will grow significantly. It depends on market condition and appetite. Either way, I believe that the valuation should be bigger than the cost of what we invested," Son said.

Paytm is among a slew of SoftBank-backed Indian startups to go public this year, including insurance firm Policybazaar and e-commerce logistics provider Delhivery. Their success could prove crucial for the fortunes of Son and his ambitious Vision Fund, which has pumped billions into loss-making companies betting that they will become huge, dominate industries and eventually become profitable.

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SoftBank reported a $3.5 billion ( 397 billion yen) loss for the July- September quarter, a harsh turn from a 628 billion yen profit a year ago in the same period, led by falling valuations in its technology portfolio.

Korean e-commerce leader Coupang and Chinese ride-hailing firm Didi have contributed to $6.7 billion and $6.1 billion in losses, out of a $17.7 billion loss in valuation of public companies in the last year.

SoftBank had first led a $1.4 billion round in Paytm in 2017, valuing it at $7 billion. It led subsequent rounds too, and its current holdings are worth over two times what it has invested.

"So for us, the IPO should be a great event. I believe they can grow their valuation going forward," he added.