Several existing investors in Paytm’s initial public offering (IPO) increased their stakes in the Indian fintech giant , even after the share price plunged by as much as 41%, according to a Bloomberg report.
BlackRock Inc and Canada Pension Plan Investment Board, both investors in the IPO, bought more Paytm shares on Tuesday and Wednesday. On Thursday, the stock rallied 7% to Rs 1,875 in early Mumbai trading, still a fair distance from its issue price of Rs 2,150.
The report suggested that the size of this week’s purchases by anchor investors couldn’t be known instantaneously. It said that representatives at BlackRock and CPPIB declined to comment.
The Paytm IPO is among the worst debuts made by a major technology company since the Dotcom Bubble in the late 1990s. Any sign that influential money managers like BlackRock are doubling their investment in the company may help ease concerns about the sustainability of the Indian stock market boom, that has lured $17 billion foreign inflows over the past year, and stoked a trading frenzy among local individual investors, said the report.
Big names like Warren Buffett’s Berkshire Hathaway Inc. and Masayoshi Son’s SoftBank Group Corp are counted as Paytm’s shareholders.
Analysts have questioned the company’s valuation and path to profitability. Macquarie Capital Securities (India) Ltd. has a price target of Rs 1,200, about 32% lower than the stock’s closing level Wednesday.
Canadian Pension Fund CPPIB, Singaporean wealth fund GIC, BlackRock, Alkeon Capital and the Abu Dhabi Investment Authority (ADIA) invested around Rs 8,235 crore. Non-institutional investors have bid for only 24% of the reserved portion. Retail investors bid for shares at 1.66 times the reserved portion.
Paytm, India’s largest public issue raised Rs 18,300 crore, and comprised a fresh issue of Rs 8,300 crore and an offer for sale (OFS) of Rs 10,000 crore by several shareholders, including founder Sharma and other investors. The net proceeds from the fresh issuance will be utilised for strengthening the Paytm ecosystem and investing in new business initiatives, acquisitions and strategic partnerships.
In July this year, Noida-based One97 Communications sought the Securities and Exchange Board of India’s (Sebi) approval for its Rs 16,600 crore IPO, the size of which was later increased to Rs 18,300 crore.
One97 Communications, the parent company of fintech platform Paytm, received the nod for the IPO from 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 such as lending, gaming, wealth management, financial services and digital commerce.
For the year ended March 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.
