- Friday, April 19, 2024
By: Shubham Ghosh
INDIA’S mobile payments giant Paytm on Thursday (18) lost a quarter of its value on market debut after raising $2.5 billion in the country’s biggest-ever IPO (initial public offering), leaving traders wondering whether the loss-making firm would ever turn a profit.
India, Asia’s third-biggest economy, is in the middle of an IPO frenzy with start-ups attracting billions in investment which many see as a positive in an otherwise Covid-hit economy.
Paytm’s story could put a reality check on that. While it got into a leading position in the fast-growing marketplace for mobile payments, it has lost money over the past three years and its market debut exposed the limits of the investors’ appetite, AFP reported.
Vijay Shekhar Sharma, the founder of Paytm who was once named as India’s youngest billionaire, wiped away tears from his eyes when India’s national anthem was played at the opening ceremony before trading began on the Bombay Stock Exchange.
The anthem has the phrase “Bharat bhagya vidhata” — “the one who will define the fortune of this country” — and he said Paytm has “actually done that”.
But the joy was shortlived as the company tanked more than 25 per cent from its IPO prices of 2,150 rupees (£21.45) within minutes after opening.
Sharma — a schoolteacher’s son — retains a 14 percent stake in the business worth $2.4 billion (£1.7 billion) at the IPO price but around $500 million (£370 million) less by mid-morning, the AFP report added.
Other shareholders are Chinese tycoon Jack Ma’s Alibaba group and associate Ant Financial, along with Japan’s SoftBank and Warren Buffett’s Berkshire Hathaway.
While Ant Financial sold 3.5 per cent of its 28 percent stake in the IPO to meet regulatory requirements that no shareholder should own more than 25 percent of a listed company. Alibaba continues to own another six per cent.
Paytm’s platform was launched in 2010 and it soon became synonymous with digital payments in a country where cash transactions have been traditionally dominant.
The platform has gained from the government’s efforts to curb the use of cash — including demonetisation of nearly all banknotes in circulation in November 2016 — and most recently, from the coronavirus pandemic.
Nearly 22 million shop owners, taxi and rickshaw drivers and other vendors in India accept payments as low as 10 rupees (£0.10) using Paytm’s blue-and-white QR code stickers.
At the end of June, the platform had 337 million customers, according to the company’s regulatory filing. In 2020-21, it handled transactions worth over $54 billion.
