Lagatar24 Desk
Mumbai, Nov.18: After its $2.5 billion initial public offering (IPO), India’s largest, was oversubscribed last week, Indian digital payments giant Paytm made its stock market debut on Thursday.
Despite low market sentiment, Paytm shares began trading on stock markets at a discount to the IPO price. The fintech behemoth’s shares began at Rs 1,955 per share, down Rs 195 or 9.07 percent from the issue price of Rs 2,150 per share.
Paytm’s losses widened minutes afterwards, with the stock dropping 20% from its IPO price to about Rs 1,705 per share. The Rs. 18,300 crore IPO by Paytm is the largest ever on Dalal Street. Investors had a mixed reaction to the issue, with institutional buyers and individual investors oversubscribing their portions while NIIs were unable to fully subscribe theirs.
Paytm, which is backed by China’s Ant Group and SoftBank, secured $1.1 billion from institutional investors and received $2.64 billion in bids for the remaining shares on offer last week, or 1.89 times.
Despite Paytm’s high valuation, some market observers had predicted that the stock would rise on its launch. Analysts encouraged investors to sell the company as soon as it was listed and wait for better possibilities. The lofty valuations of Paytm have sparked a lot of concern. Paytm, which has a market valuation of Rs 1.26 lakh crore, has yet to earn a profit, which has been a source of discussion among experts. Over the next few years, the Ant-Group-backed company is likely to continue to lose money.
Paytm was launched in 2010 by engineering graduate Vijay Shekhar Sharma as a platform for cellphone recharges. After ride-hailing business Uber listed it as a speedy payment option in India, the company developed quickly, and its use grew even further in late 2016 after New Delhi’s surprise ban on high-value currency notes encouraged digital payments.
According to Forbes, Paytm’s success has made Sharma, a schoolteacher’s son, a billionaire with a net worth of $2.4 billion. Hundreds of new millionaires have been created as a result of the IPO.
