You are here: Home » Markets » IPOS » News
Business Standard

Paytm finds buyers, but no blow-out demand in India's largest IPO

Institutional investors bid for 2.79 times the shares reserved for them, while retail investors bid for 1.66 times

Paytm | initial public offering (IPO) | Markets

Reuters  |  BENGALURU 

Photo: Bloomberg
Photo: Bloomberg

Paytm's $2.5 billion initial public offering (IPO), India's largest, was oversubscribed at the close of bidding on Wednesday, although investors showed less enthusiasm than for some other tech firms that have ridden the country's IPO boom.

The company, which had already raised $1.1 billion from anchor investors, received $2.64 billion worth of bids for the remaining shares on offer, or 1.89 times the total, according to stock exchange data.

Institutional investors bid for 2.79 times the shares reserved for them, while retail investors bid for 1.66 times.

Some analysts said the company, centered around payments but marketed as an all-in-one app, may have struggled to sell its complex model to investors as well as its path to profitability.

Loss-making Paytm, formally called One97 Communications, offers a range of services from banking, shopping, movie and travel ticketing to gaming.

"In every business there is already an incumbent player and there is no clear path to profitability. When you combine that with the valuation, it just doesn't sit right," said a fund manager with an investment firm that has stakes in several Indian startups, but decided against investing in

Other analysts, however, said a subscription level of 1.89 times was on a par with other major global issues and showed Indian investors had confidence in digital businesses.

increased the size of its offering last month and priced it at 2,080-2,150 rupees per share, targeting a $20 billion valuation which some retail investors saw as expensive.

"I'd have liked to invest in Paytm if the price was a little lower. At this price Paytm is highly overvalued for a company that's not going to turn a profit any time soon," said Pratik Chandra, a 30-year old chartered accountant from Jamnagar, Gujarat.

Marquee investors trimmed their stakes in the IPO. Ant Group, which had a 28% holding in Paytm, is selling shares worth 47.04 billion rupees and will be left with a 23% stake. SoftBank's Vision Fund is cutting its stake by 2.5 percentage points to 16% with a 16.89 billion rupee share sale.


By comparison, food delivery start-up Zomato's IPO was more than 38 times oversubscribed earlier this year and its shares are up around 79% from the offer price, while e-commerce beauty platform FSN E-Commerce Ventures (Nykaa) saw demand for 82 times the number of shares on offer.

Nykaa's shares rocketed 96% from the offer price on their market debut on Wednesday.

Zomato and Nykaa are both much smaller companies than Paytm, however.

India has seen an IPO frenzy this year with increased retail participation as investors rode a wave of liquidity provided by central banks that has taken domestic to record highs.

Dozens of companies have tapped the capital market and everyday brands including Oyo, Dehlivery and PolicyBazaar have sought stock exchange listings.

Paytm last week said it had allocated shares worth 82.35 billion rupees to more than 100 institutional investors, including the government of Singapore, BlackRock Global Funds, Canada Pension Plan Investment Board and Abu Dhabi Investment Authority.

($1 = 74.3325 Indian rupees)


(Reporting by Chandini Monnappa, Vishwadha Chander and Chris Thomas in Bengaluru, Abhirup Roy in Mumbai, Sankalp Phartiyal in New Delhi; Editing by Shailesh Kuber and Mark Potter)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, November 10 2021. 19:55 IST