By Arasu Kannagi Basil
Feb 12 (Reuters) – PayPay publicly filed its paperwork for a U.S. initial public offering on Thursday, as the SoftBank-backed Japanese payments app moves ahead with its highly anticipated stock market flotation after a U.S. government shutdown-driven delay.
The move sets the stage for the first U.S. listing of a SoftBank-majority investment since the blockbuster IPO of chip designer Arm Holdings in 2023.
PayPay’s stock market flotation was initially expected in December, but the longest U.S. government shutdown on record delayed the regulatory review and pushed back the planned listing.
The company reported a profit of 103.3 billion yen ($675.47 million) on revenue of 278.5 billion yen for the nine-month period ended December 31, compared with a profit of 29 billion yen on revenue of 220.4 billion yen a year earlier.
“These are very impressive numbers. When we talk about the strongest companies getting premium valuations, there’s no doubt PayPay qualifies. Only a handful of companies have this growth and margin profile,” said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.
“The U.S. IPO market could use a win right now, and a strong debut from a large company like this would do it, even if it is a sort of unique story as a Japanese fintech.”
The offering could raise more than $2 billion and investors expect the valuation of PayPay could exceed 3 trillion yen, Reuters previously reported.
PayPay did not disclose the size or the proposed price range. The company and SoftBank plan to sell shares in the proposed offering.
The listing had been in the works for some time, with SoftBank setting PayPay’s flotation as a goal back in 2021.
In May, SoftBank announced that the IPO preparations were underway, and months later PayPay revealed it had confidentially filed for a New York listing.
PayPay’s listing comes at a time when billionaire Masayoshi Son’s sprawling tech conglomerate has been monetizing assets to plough capital into its ever-growing AI push.
DIGITAL PAYMENTS BOOM
Jointly formed by SoftBank and Yahoo Japan in 2018, PayPay has played a role in accelerating Japan’s digital transformation, encouraging consumers to move away from cash by offering rebates on payments through its mobile app.
Just over seven years since its founding, PayPay has rapidly expanded and grown into one of Japan’s most widely used payment platforms, amassing roughly 72 million registered users as of December 31.
Once better known for its “cash is king” belief, Japan’s cashless payments ratio has drastically improved in recent years. Yet, the country remains a global laggard in payment technology, leaving ample runway for growth.
“The Nikkei 225 is at an all-time high, so investors are clearly enthusiastic about Japanese equities. I expect this will be the largest ever U.S. IPO from a Japanese company,” Kennedy said.
Analysts believe PayPay could command a premium to its U.S.-listed fintech peers given its strong presence in Japan and the rising shift towards cashless payments in the country.
While PayPay began with a focus on cashless payments, it has since expanded across credit, banking, securities and insurance.
Goldman Sachs, J.P. Morgan, Mizuho, and Morgan Stanley are the lead underwriters for the offering. PayPay will list on the Nasdaq under the symbol “PAYP”.
($1 = 152.9300 yen)
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Maju Samuel and Alan Barona)
