Paytm lists at discount, share price drops 25% on stock exchange debut
Photo Credit: VCCircle

Paytm operator One97 Communications, backed by US investor SoftBank and Alibaba’s Ant Financial, listed at a 9% discount on its debut on the Indian bourses on Thursday.   

The stock opened at Rs 1,950 on the National Stock Exchange and the listing price on the BSE was Rs 1,955, against the issue price of Rs 2,150.   

By 11.00 am, the share price dropped further by almost 25%, and was trading at Rs 1613.80 apiece on BSE. 

" Today is the day which many of us never expected to happen, which many of us never believed would happen, today is the day when a common surname feels like an outlier in this country," said Paytm Founder and chief Vijay Shekhar Sharma. 

He added, “Today is the day I believe, India races off to another milestone when not just the Government of India or a large corporate/conglomerate could proudly say that we could list… we could bring it to stock exchange and  we could build probably the largest IPO in this country.” 

Ahead of its listing, brokerage firm Macquarie Research had initiated an “underperform” rating on One97 Communications, parent of Paytm, saying its business model lacks focus and direction. 

The mega initial public offering (IPO) of Paytm, among India’s leading digital payments platforms, saw a tepid response from investors having subscribed 1.89 times last week.   

Retail investors bid for shares at 1.66 times the reserved portion, but non-institutional investors had put in bids for only 24% of the reserved portion. 

"It feels very warm inside to say that is Paytm imarat mein ek eet humne bhi lagayi hai (that we too have laid a brick in this edifice of Paytm)," said Kamal Yadav, managing director, Morgan Stanley India, one of the anchor investors. 

Other anchor investors including Canadian Pension Fund CPPIB, Singaporean wealth fund GIC, BlackRock, Alkeon Capital and Abu Dhabi Investment Authority (ADIA) put around Rs 8,235 crore.

Paytm was India’s largest public issue, raising Rs 18,300 crore that comprised a fresh issue of Rs 8,300 crore and an offer for sale (OFS) of Rs 10,000 crore by several selling shareholders including founder Sharma and the investors. The net proceeds from fresh issuance will be utilised for strengthening the Paytm ecosystem, and investing in new business initiatives, acquisitions and strategic partnerships.   

In July, Noida-based One97 Communications sought the securities regulator’s approval for its Rs 16,600 crore IPO, the size was later increased to Rs 18,300 crore.   

One97 Communications, the parent company of fintech platform Paytm, received the nod for the IPO from Securities and Exchange Board of India (Sebi) in October.    

Led by founder and chief executive Vijay Shekhar Sharma, the 11-year-old Noida-based firm has expanded beyond digital payments into newer categories of lending, gaming, wealth management, financial services and digital commerce.   

For the year ended March end 2021, Paytm’s consolidated revenue shrunk 11% to Rs 3,187 crore, but it managed to cut losses by 42% to Rs 1,701 crore. 

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