Soon after industry sources confirmed the news, the price of Paytm’s shares jumped double to $328.77. Should you be buying Paytm shares ahead of the IPO?+
- The digital payments and financial services giant Paytm’s board granted an in-principle approval to raise around $220 billion through an initial public offering in the Oct-Dec quarter this year.
- Paytm is expecting an enterprise value of over ₹2 lakh crore for the IPO.
- The company claims to be around 30-50 percent bigger than mobile apps in the same segment.
- It is could emerge to be one of the largest IPOs in the country if Paytm achieves its planned target.
The digital payments and financial services soft bank Paytm has now received an in-principle nod from the company’s board to raise around $220 billion through an initial public offer (IPO) during the October-December quarter of 2021. This much-speculated decision has been confirmed by industry source and that the company is expecting to look at an enterprise value of over $2000 billion for the IPO. The industry source confirms that the board scheduled a meeting last week to discuss the same. Though, the Paytm spokesperson refused to share any thoughts on the recent development.
Possibly, it is set to be one of the largest IPOs in the country if Paytm manages to meet its target.
Paytm shareholders include Vijay Shekhar Sharma (14.67 percent), Saif Partners (18.56 percent), Softbank Vision Fund (19.63 percent), Alibaba’s Ant Group (29.71 percent). While T Rowe Price, Discovery Capital, Berkshire Hathaway, and AGH Holding hold less than 10 percent shares of the company.
Meanwhile, the company claims to be around 30-50 percent larger than mobile apps in the segment with more than 1.4 billion transactions recorded every month. Paytm also had reported a narrowing of loss in the fiscal year 2019-20 by 40 percent and an increase of revenue to $36.29 billion on a year-on-year basis.
Paytm share price doubles over IPO buzz – Should you buy it now?
Paytm share price has spiked in the unlisted market after the announcement of the company’s IPO. The stock has nearly doubled in the market to up to $328.77 (₹24,000). This has been confirmed by the people who deal in unlisted companies shares and prices. In the unlisted market, the shares were seen trading at $150.69-164.39 (₹11,000-12,000) per share before the news of an IPO broke out. But, in just a matter of few days post the announcement, the share price simply doubled up, according to the unlisted markets dealers.
Pre-IPO investing: Be careful
Most analysts and experts would suggest anyone who might be interested in investing into the digital payment firm before the IPO to be a little more cautious. The most important thing to consider here is that the company has not yet decided on an issue price and it may be the case that the current price at the unlisted market now is way higher than the IPO price. Also, it may be worth remembering that pre-IPO stocks come with a lock-in period of one-year.
Further, a similar situation had happened with the shares of Barbeque Nation as the 2018 pre-IPO price was $15.07 (₹1,100) that was later corrected to $8.22 (₹600) while the IPO came in with a price at $6.85 (₹500). So, it may be wise to just wait and watch for now.
The Tough Game
Undoubtedly, Paytm has shaken itself free from the relentless competition from world players including Amazon Pay, Walmart’s PhonePe, Facebook’s WhatsApp Pay, and Google Pay. It is mainly so because upon its successful IPO launch, the company would be a biggest offer. Coal India’s $152 billion IPO was launched in 2010 which continues to stay the country’s biggest IPO until now.
Keen eyes watch the valuations Paytm could make given the company is still making losses and with such a highly disruptive space where it faces stiff fight from PhonePe and Google Pay. Also, the grey market dealers reveal that there is a low supply of shares. It might be for the best to wait for the company’s further action such as Paytm can announce further shares split or bonuses and such.
However, Paytm is one of the top players in Fintech and that too with a much deeper market penetration and share. The company that originally began as a payments interface eventually turned into a payments bank in itself and promises more expansion in the future.