Zomato is first IPO on Paytm Money's new pre-IPO open application feature

Paytm's stocks and mutual fund investment platform Paytm Money has launched a feature which allows users to apply for initial public offerings (IPOs) before the actual IPO opening in the markets. 

Zomato is the first IPO on Paytm Money launched with this feature, and thousands of applicants on the platform have already placed their orders over the last two days, the company said. 

Paytm Money is the first digital broker in India to offer this functionality, and expects this to significantly increase the participation of retail users in IPOs via its platform.

Varun Sridhar, CEO of Paytm Money said, “Interest in IPOs has surged over the last couple of months, and we have seen cases where users have missed out from applying because of issues like tight schedules during market hours, and demand-led processing delays in the markets. We wanted to make the lives of our users easier and ensure that they don’t miss out on good opportunities.”

The conventional application process for IPOs was designed around timings, and till date, users are able to apply for an IPO only during select market hours over a window of three days. A large proportion of the investing community does not trade actively, and is likely to be busy during market hours, missing out on some of these IPOs. This is particularly true in case of millennials and young investors. The “Pre-IPO Open application” feature was specifically designed to make the lives of such users better, the firm said.

A user can now place an IPO order 24x7 on days when the “pre-Open IPO Application” Feature is enabled. The order is recorded on Paytm Money’s system, and sent to the exchange for processing whenever the IPO opens. The user is notified of their application status throughout the journey, to ensure a seamless experience. 

There is also the issue of congestion in servers/networks experienced by some market participants during popular IPOs, driven by high demand during a short time span. 

"As this feature gains traction, it might be possible to spread out the Pre-Open IPO Applications evenly during the market hours, reducing load on exchanges and payment gateways, and ensuring a better experience for broad market participants," the company said in a statement. 

Paytm Money has also launched a set of other features in a bid to offer the most comprehensive IPO application experience to its users. Users on Paytm Money can now complete IPO applications with a single click, apply via the shareholder category, and also track live IPO subscription numbers.

Paytm Money has said earlier it is targeting over 10 million users and 75 million yearly transactions in the coming financial year, as the company heads for its own IPO later this year. It was launched in September 2018 as a platform for allowing Paytm users to invest in mutual funds. It sells mutual funds directly to consumers through a low-cost regular plan, and removing distributor commissions.

An extraordinary general meeting of the parent firms One97 Communications is scheduled for Monday, where the Board will resolve to consider and approve the declassification of Vijay Shekhar Sharma from his status as a promoter of the company, in addition to fresh issue of equity shares and an offer for sale from certain existing shareholders. 

The firm’s annual general meeting is scheduled for June 30.

Paytm is eyeing to raise $3 billion (around Rs 22,000 crore) through its IPO.  The IPO plan received in-principle approval for Paytm's Board in May. If successful, this could be the biggest initial public offering (IPO) by an Indian company, breaking Coal India’s 2010 record of  Rs 15,475 crore.