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Vijay Shekhar Sharma reveals plan to spin out Paytm’sdifferent units and list them in 3 years

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  • Ten-year old Paytm has 9 different units like Paytm Payments Bank, Paytm Money , Paytm FirstGames, and Paytm Mall.
  • These verticals will be listed as separate companies in the next 3 years, Founder and CEO Vijay Shekhar Sharma told Business Insider.
  • Experts believe this will boost Paytm’s valuation, reduce the risk in the business, and make it suited to the different regulations in each sector.

Paytm founder Vijay Shekhar Sharma was keen on pushing for profitability two months ago. Now, a month into the escalation of the coronavirus crisis, he is looking to unlock value. In an exclusive chat with Business Insider, Sharma revealed plans to spin out the different verticals of Paytm and list them asseparate companies.

“Paytm might not get listed but the subsidiaries or affiliate companies might get listed. Bank, commerce, gaming are all spinouts of Paytm. Our banking business which is incidentally profitable by design, after a certain amount of net worth it has an obligation to get listed,” he said in a Twitter Live session hosted by Business Insider and Observer Research Foundation (ORF).

A win-win situation for Sharma

Ten-year old Paytm has nine different units like Paytm Payments Bank, Paytm Money, Paytm Games,and Paytm Mall. Each business has a different cycle, regulations, and challenges. “For example, mutualfunds regulated by SEBI (Securities and Exchange Board of India) can’t take a banking licence regulated by RBI (Reserve Bank of India) within the same company.” said Sumit Agrawal, Founder, Regstreet Law Advisors and a former SEBI official.

There is another advantage too. Sharma can raise money from the public and retain control of the parent firm, Paytm, which may not go for an initial public offering (IPO). “You are in a win-win situation where public funding comes in and the control of the main company remains with you. Additionally, funding coming in also increases the valuation of the holding company and provides better flexibility in operations and management,” Sumit added.

Paytm’s eye on profitability

Until it gets listed Sharma has the world’s VC biggest names backing it up – Softbank, Alibaba Group,Ant Financial and SAIF Partners. In November 2019, Paytm raised $1 billion from US asset management firm T. Rowe Price, SoftBank and others. Its valuation shot up to $16 billion.

Sharma also follows his famous 3-3-3 philosophy – three years for product market fit, then three years for monetization pitch, then three years for profitability.

Paytm is currently in its 10th year of business and recording massive losses. One97 Communications reported a loss of ₹4,217 crore in FY2019, and its revenues recorded a marginal growth to ₹3,579 crore from ₹3,309 crore.

In the same year, Paytm clocked in a gross transaction value of $50 billion through 5.5 billion transactions. It has set a target of 12 billion transactions by FY20.

But all eyes are on the end of Sharma’s 12th year, when he hopes to turn his businesses into profitabilityand head for a market listing.