Paytm’s market debacle unlikely to dampen India’s IPO frenzy

FILE PHOTO: A worker adjusts a hoarding of Paytm, a digital payments firm, in Ahmedabad, India, January 31, 2019. REUTERS/Amit Dave

Paytm’s market debacle is unlikely to cast a chill over the frenzied initial public offering market, though it may temper the valuation expectations of money-losing companies that are set to go public.

IPO activity is expected to remain strong, with at least 10 companies set to launch their share sales in the coming weeks, four industry experts said.

The companies aim to raise a combined 20,000 crore through their share sales.

“Good quality companies at attractive valuations will always find takers,” said Pranav Haldea, managing director at Prime Database, a primary market tracker. “Unless you see a major trend reversal in the secondary market, the primary market activity shall continue. The Paytm IPO should result in some tempering of valuations, especially for loss-making startups that are in the IPO pipeline. However, it is not that investors have become averse to all IPOs.”

Major companies that are expected to launch IPOs in the coming weeks include Star Health and Allied Insurance Co. Ltd, which wants to raise 7,500 crore; Adani Wilmar Ltd, which plans to raise 4,500 crore; and Vedant Fashions, the parent of Manyavar, which will raise 2,500-3,000 crore.

Other companies planning to go ahead with their IPO launch in December include MapMyIndia, footwear retailer Metro Brands, travel SaaS company RateGain Technologies, Shri Bajrang Power and Ispat, CMS Info Systems Ltd, Tracxn Technologies and Tega Industries, the people cited above said.

Some of these launches are subject to receiving Sebi approvals, which may happen soon, the people said.

This rush of IPO is coming even as Paytm’s 37% decline in two trading sessions since listing on Thursday has led to an uproar on social media over the pricing of IPOs. Paytm, however, surged nearly 10% on Tuesday, paring some of the initial losses.

On Tuesday, data analytics provider Latent View Analytics surged 148% on market debut, recording one of the highest listing-day gains.

“The primary market had heated up a bit, and the Paytm listing did hurt sentiments. But it has not derailed the entire market. So the impact is limited,” said an investment banker, one of the four people cited above. The person sought anonymity as he is advising some of the companies planning to launch IPOs. “Overall, stock markets, too, have seen a correction. So, all of this has led to a marginal correction in pricing, and we see that investors are becoming more selective on companies they want to back. Companies, too, are tempering expectations a bit,” he added.

The benchmark Sensex has receded 3.1% in the past 10 sessions, largely owing to consistent selling pressure from FIIs. On Monday, the market saw its steepest fall in seven months, declining almost 2%. It rose 0.34% on Tuesday.

A second person cited above said the strong listing of Latent View and the high subscription numbers seen for the recently concluded Go Fashion Ltd IPO indicate investor demand remains strong, albeit selective.

The Go Fashion India Ltd share sale, which ended on Monday, was subscribed over 135 times.

“The impact is not the same across the board. But surely sectors such as fintech have taken a hit. Other listings from the sector, too, haven’t done well for investors. So, that is one space that will see a slowdown from a sentiment perspective. The other big tech IPOs, such as Delhivery or Pharmeasy, have just filed documents, so they won’t be impacted much,” said a third person.

Mint reported on Tuesday that fintech firm Mobikwik had seen a sharp correction in its share price in the unlisted market, following the IPO of its bigger rival Paytm.

The Economic Times also reported on Tuesday that Mobikwik is likely to defer its IPO plans.

This article was first published on livemint.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.