Bengaluru-based fintech unicorn Razorpay began the process of relocating its headquarters from the US to India, amidst a growing trend of startups moving back to the country. This transition aligns with the govt’s accelerated efforts to facilitate reverse flipping for Indian companies currently based overseas. This move paves the way for Razorpay to go public by 2026.
Razorpay has initiated reversing its corporate structure despite significant tax implications, which industry observers say could be to the tune of $300 million. “There’s no challenge per se, it just takes time. The process is straightforward. We filed it through the fast checkout route. The National Company Law Tribunal (NCLT) process takes a while. The benches have a lot of cases to handle. The rules came out six months ago. We are testing waters, but this is expected to be faster,” its cofounder and CEO Harshil Mathur told TOI on Tuesday.
Currently, the company is seeking approval from the RBI, which helps reduce the workload on the NCLT. “India understands what Razorpay does. It just made logical sense for us to list in the market where people know us. Flipping comes with a significant cost. But long term we feel it’s worth it,” Mathur said. However, industry insiders told TOI that the new rules have brought down the timeline of reverse flipping to less than six months since ratification. “By the law, there is a deemed approval from RBI that is automatically gained with compliance to the FEMA. The company then only requires approval from the regional director representing the Ministry of Corporate Affairs,” a corporate lawyer told TOI.
Razorpay, which is valued at $7.5 billion, has initiated discussions with investment bankers to get a grasp of the public offering. Mathur also said he aimed to get the payments business to break even before they take the IPO route. “Public markets appreciate the predictability of business the most,” he said. The company, founded by Mathur and his fellow IIT-Roorkee batchmate Shashank Kumar ten years back, was among the first few Indian-origin businesses accelerated at Silicon Valley seed fund Y Combinator.
In the last ten years, Razorpay served 5 million businesses and over 200 million end consumers in India. Razorpay has an annualised total payment volume (TPV) of $180 billion and counts 78 unicorns as its customers.
The fintech player’s revenue increased 9% to Rs 2,501 crore in the 2023-24 financial year, from Rs 2,293 crore a year ago. Its net profit rose fivefold to Rs 34 crore during the same period, as per a company statement.
For about nine months of the last fiscal, the company paused onboarding new merchants to secure its payment aggregator (PA) authorisation from RBI. When TOI asked if Razorpay Inc is eyeing $1 billion in revenue by 2030, to which Mathur said, “Hopefully.”
Currently, online payments make up 40% of Razorpay. “We expect that our growth rate will be over 50% year-over-year, at least for the next three to four years. About 80% to 85% of our business comes from payments and 15% to 20% comes from software subscriptions. This ratio should get to about 60:40 in the next three to four years,” Mathur added. Commenting on its international presence, he said the firm has forayed into Malaysia and is looking to expand its operations to Singapore in the near future.