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INVESTOR PRESENTATION
Shounak Mitra | Suhail Bhansali | Suyash Singhal | Svati Goyal | Vatsal Shah | Vivek Jain
Company Overview
Market Size Valuation Term Sheet
Offerings
1. Mobile/ DTH/ Utility Bill payments2. Wallets and Payment Gateway3. Marketplace
Competition
• Mobikwik – No 1 online Recharge Site
• Fast Recharge – First online mobile recharge company
• Freecharge – 2nd biggest recharging and couponing site
• Paypal – Largest global payment gateway
History
• Founded by Vijay Shekhar Sharma
• Consumer brand of One97 Communications
• One97 investors include SAIF partners, Intel Capital and SAP ventures.
What’s Next
• Target of 1 mn merchants
• Target mobile users – 100 mn
• Target wallet base – 100 mn
• Grocery business with 10000 transactions in the first few months
• 50000 retail outlets
• Payment Bank License
How large is the mobile payment market and how fast is it growing?
Company Overview
Market Size Valuation Term Sheet
0.0%
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% o
f sm
artp
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use
rs Mobile Payment Trends in India
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% o
f p
op
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Smartphone Penetration in India
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Global Mobile Payments Transaction Value
Year 2014A 2015A 2016P 2017P 2018P 2019P 2020P
Mobile Payment Users (in millions) 71 98 1303 170 218 274 341
Source: Google’s Our Mobile Planet, Gartner, Goldman Sachs, eMarketer
How large is the m-tailing market and how fast is it growing?
Company Overview
Market Size Valuation Term Sheet
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M-commerce sales ($bn)
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M-tail sales ($bn)
Figures in $ billion 2014 2015 2016 2017 2018 2019 2020
E-commerce sales 17.00 22.94 30.96 41.78 56.38 76.08 102.66
E-tail sales 3.56 5.52 8.54 11.10 14.43 18.76 24.39
M-commerce sales 1.87 3.32 5.89 10.44 18.53 32.88 58.33
M-tail sales 0.71 1.18 1.95 3.23 5.34 8.84 14.64
Company Overview
Market Size Valuation Term Sheet
What are the expected revenue streams from the mobile payment business?
Paytm Users
Date No. of Wallets Daily Transactions Ratio Average Transaction Value
Nov-14 15000000 800000 18.75 Rs. 250-300
Feb-15 25000000 1000000 25 Paytm Avg. Revenue/Transaction
Apr-15 50000000 2000000 25 3.0%
Dec-15 100000000 4000000 25 (Convenience, Commission, Charges)
Scenario 2: Average Transaction Value Increases (@ 5% = rate of inflation)
Year 2014A 2015A 2016P 2017P 2018P 2019P 2020P
Number of Smartphone Users 253404800 320557072 369820283 420219650 454366174 459818568 465336391
Mobile Payment Users 70953344 97745890 130430883 170025827 217548224 274015580 340445398
Paytm Market Share 21% 51% 77% 77% 77% 77% 77%
Number of Daily Transactions 800000 2000000 4000000 5214281 6671678 8403396 10440638
Average Daily Transaction Value 200000000 500000000 1050000000 1437186266 1930825410 2553594997 3331298343
Average Daily Revenue 6000000 15000000 31500000 43115588 57924762 76607850 99938950
Annual Revenue (in $ million) 37 91 192 262 352 466 608
Company Overview
Market Size Valuation Term Sheet
What are the expected revenue streams from the m-tailing business?
Scenario 1 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 0% 0% 0%
Market share in M-tail 6.00% 6.30% 6.80% 7.48% 7.48% 7.48% 7.48%
Sales (billion USD) 0.04 0.07 0.13 0.24 0.40 0.66 1.10
Revenue (at 7% of sales) in million USD 2.99 5.20 9.29 16.92 28.00 46.33 76.68
Scenario 2 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 10% 10% 10%
Market share in M-tail 6.00% 6.30% 6.80% 7.48% 8.23% 9.06% 9.96%
Sales (billion USD) 0.04 0.07 0.13 0.24 0.44 0.80 1.46
Revenue (at 7% of sales) in million USD 2.99 5.20 9.29 16.92 30.79 56.06 102.06
Scenario 3 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 0% 0% 0%
Market share in M-tail 8.00% 8.40% 9.07% 9.98% 9.98% 9.98% 9.98%
Sales (billion USD) 0.06 0.10 0.18 0.32 0.53 0.88 1.46
Revenue (at 7% of sales) in million USD 3.99 6.93 12.39 22.55 37.33 61.77 102.23
Scenario 4 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 10% 10% 10%
Market share in M-tail 8.00% 8.40% 9.07% 9.98% 10.98% 12.07% 13.28%
Sales (billion USD) 0.06 0.10 0.18 0.32 0.59 1.07 1.94
Revenue (at 7% of sales) in million USD 3.99 6.93 12.39 22.55 41.06 74.75 136.07
Scenario
Market share in
2014Growth in market
share
1 6%
Market share constant after 2017
2 6%
Market share steadily increasing
3 8%
Market share constant after 2017
4 8%
Market share steadily increasing
Company Overview
Market Size Valuation Term Sheet
How have comparables been valued?
Business of Paytm is divided into two parts and each part is valued individually using the comparable ratios of related companies
M-T
ailin
gM
ob
ile
Pay
me
nt
Revenue DriversCustomer baseMode of PaymentNumber of daily transectionsAverage transaction valueProduct Portfolio
Revenue DriversCustomer baseMerchant baseNumber of daily transectionsAverage transaction value
Comparable Company
Snapdeal• 75% of its transactions come from
mobile, maximum when comparedwith other e-commerce giants
• Recently acquired Freecharge, aimsto target smart phone users.
• Similar product portfolio
Snapdeal (Only Market Place)
Revenues/year 168.1 Crore Rs
Customer base 20 million
Valuation 62000 million Rs
Figures are of 2014
Valuation/revenue 36.41
PayPAL• The most established player for
mobile wallet in the market• eBay acquired PayPAL in July,2012 for
$1.4 billion, which allows us to factorin the effect of m-commerce onwallet business
• Can be seen as proxy of Paytm’sfuture in terms of scale
PayPAL just after the acquisition in 2012Payments per day 440000
Daily amount (million $) 24
deal valuation (billion $) 1.4
Revenue/year @ 2.5% margin 219
Avg payment amount sent in a day ($) 55
value/daily transaction value 58.33
Valuation/revenue 6.39
1
2
Company Overview
Market Size Valuation Term Sheet
What is Paytm valuation using the venture capital method?
M-Tail Business 2020( figures in million $)
Projected Revenue 103.84
Price to sales multiple 36.41
Value 3780.47
Wallet Business 2020( figures in million $)
Projected Revenue 608
Price to sales multiple 6.39
Value 3885.12
7665.59 million $
Discount factor 35%
Present value of PAYTM
1.7 Billion $
Post money value1.70 Billion $
Pre money value( Post money- Investment)
1.35 Billion $
How much investment is needed?
Strategic Growth Goal Objective PlanCapital Requirement
(in $ million)
Greater geographic penetration and speed
Expand deliveries from 5000-7000 pin codes to 36000
Platform for aggregating courier companies
Shipdroid seed money Rs. 60 crore 10
Larger catalogue for users to choose from
Increase number of products and product categories
Increase number of merchants from 15000 to 1 m
Offline Classroom Digital Literacy Rs. 2000/p 33
Increase customer base and market share
Reach 100 million mobile wallets target Aggressive advertising spends
Rs. 60 per customer acquisition 50
One-stop destination for all banking services
Offer all the services of payment banks Payment bank license from RBI
Entry capital Rs. 50 crore for operations 8
Partner with banks to offer services to end users
Open 50000 offline retail outlets; IMPS
Rs. 15000 monthly rental for outlet 150
Catering to growing demand in services
Expanding manpower across all verticals Hiring 4500 new employees Avg. salary is Rs. 8,82,223 66
New office space to accomodate employees Three new office spaces in Noida
Rs. 30-35/sq ft for 350,000 sq ft spread 24
Total 341
Company Overview
Market Size Valuation Term Sheet
Company Overview
Market Size Valuation Term Sheet
Stake Holding Pattern
Proposed Terms for Preferred Stock Financing of Paytm (One97communication)1. Board Rights: The holders of preferred stock shall be entitled to elect one member to the Company’s Board
2. Piggyback Rights: • The holders of Preferred Stock shall be entitled to “piggyback” registration rights on registrations by the Company on any demand
registration of any other investor subject to the right, however of the Company and its underwriters to reduce the number of shares proposed to be registered pro rata in view of market conditions.
• Unless the registration is with respect to the Company’s IPO, in no event shall the shares to be sold by the Investors be reduced below 20% of the total amount of securities included in the registration
3. Preemptive Rights and Control Covenants: The investor has the right to maintain only upto its ownership interest in the Company in the event the Company issues additional stock and will contain customary negative control covenants including provisions restricting the Company from doing any of the following without the prior written consent of at least two thirds of the Preferred then outstanding.• Any alteration or adverse changes in the rights, preferences or privileges of the Preferred, and any increase in number of shares• Any merger or sale of substantial portion of assets, any material change in nature of business conducted.
Preferred Stock - 15% Dividend
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