Paytm listing debacle casts pall on pipeline of India tech IPOs

In early November, Paytm founder Vijay Shekhar Sharma traveled to Tirupati in the mountains of southern India. His temple, renowned for promoting wealth and prosperity, was the ideal place for Sharma to “seek [the] the blessing of God ”before establishing India’s first major public offering.

The IPO did not follow the script this week, with sections in fintech lower than one-third in its first two days as a state-owned company, making it one of the worst in the history of the Indian market. Shares in the group, which raised $ 2.5bn and were valued at $ 20bn, have fallen but remain about 17 percent below their value.

The controversy has focused on Paytm, which owns SoftBank and Alibaba, as well as IPO writers including Goldman Sachs, Morgan Stanley and Citigroup. This has also raised concerns for investors and businesses, fearing that it could jeopardize a number of Indian trips that are expected to strengthen the region’s position as a leading technological hub after the US and China.

“The concern for all of us is that does this affect India’s technical thinking? “Calculating has to be very difficult.”

MobiKwik, India’s fintech company, has delayed its pre-scheduled IPO in November, saying this week it would “write at the right time”.

Ashneer Grover, co-founder of fintech BharatPe, said Paytm had “ruined” the Indian market. “Nothing can come to this market,” he told Moneycontrol.

Sandeep Murthy, a colleague at Lightbox business group in Mumbai, said there could be a “cold season” on the fintech list until early next year but said it was “natural”.

Indian tech companies have earned $ 5bn through listings this year, according to Dealogic, about 10 times that of last year. The world has come out as very profitable about the permanent collapse of the tech industry in China that has caused investors around the world to look the other way.

Zomato’s food company, which was launched in July, has dispelled doubts about burning and accounting, as its stock has doubled from its IPO price. Shares in the insurance aggregator PolicyBazaar and the beautiful Nykaa platform have also performed well since its inception earlier this month.

But Paytm’s huge list, which accounts for about half of all that was raised through India tech IPOs this year, could cover some.

Paytm, which was established 11 years ago, has grown to become one of India’s most popular technology because of its handbags. The charismatic Sharma has attracted investors around the world including Alibaba founder Jack Ma, Warren Buffett and SoftBank CEO Masayoshi Son.

Performance Chart from the given price (%) for highlighting new Indian technical listings

But the adoption of UPI digital payment systems by the Indian government disrupted his big business, and Google and PhonePe owned by Walmart are now market leaders. Paytm has varied in everything from investing to insurance but it targets its competitors in every area and lacks legitimate power, say experts.

His big business is not making money and the move to reduce advertising costs shows that he is trying to make a good point before it is mentioned, says Prashant Gokhale, co-founder of the research group Aletheia Capital in Hong Kong. “There was a lot of hype with SoftBank and Warren Buffett there,” he said.

One person who is directly aware of Paytm’s negotiations on IPO prices said there is a lot of money laundering, mainly due to the China crisis that has made India as attractive as a destination.

“Retailers are looking for a place to go, which raised prices without a hitch,” the man said. “A lot of money chasing business that they didn’t get is probably fun now.”

A chart showing the growth of money in the technical sector in India than in China

China’s largest paymaster, Paytm, is also at risk of losing control and popularity, with India launching a series of measures to reduce China’s spending following last year’s wars. While Alibaba and its financial group Ant sold shares in the IPO, together they still own about a third of the company.

The show compares the 2008 Reliance Power disaster series, which raised a record $ 1.5bn down by 17 percent on the first day of trading. Its shares never returned, and this week they were selling 95 percent below their fixed price.

Madhur Deora, Paytm’s chief financial officer, told the Financial Times that the company “would pay close attention to how we operate….

Some say Paytm’s painful start could be a blessing in disguise for investors to look to other reputable and highly skilled Indian companies that are skeptical.

Which really encouraged me [was] seeing that the market was unreasonably happy, ”Murthy of Lightbox said of the company’s founding. If the market only values ​​things, then [be] serious problems in the future. ”

A Goldman Sachs analysis found that Indian companies expected to have an IPO had a lower price target, one metric used to target companies, 21 over the past three years, compared to three India-based Benchmark Nifty index. .

Some of the most notable ones to come are the Oyo budget hotel team, which posted a review raising $ 1.1bn last month. Chief Executive Officer Ritesh Agarwal, with the support of SoftBank, tried to make Oyo the largest hotel company in the world to reduce its ambition for the financial crisis.

Oellow Fellow SoftBank Portfolio of Ola, a rising shareholder, is also planning to make a comeback in the coming months. The company is now focusing on making cheap electric scooters, but the introduction of new bicycles has been repeatedly delayed.

“Counting is ahead,” said Mohit Nigam, fund manager at Hem Securities in Mumbai. “We as investors must be wary of incoming IPOs because these guys, no matter how good their businesses are. . . one cannot ignore the value of money. ”

Rajan Anandan, head of Sequoia Capital India, said it was too early to judge Paytm’s long-awaited expectations, but acknowledged that technical accounting in India and abroad was at risk of recurrence.

“Sometime there will be reforms in public and private markets” in the technical sector, he told the FT-Indian Express event this week. “When this happens it will affect everyone.”

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