Paytm’s listing debacle dents unlisted shares of smaller rival MobiKwik

Signage for digital-payments provider Paytm, operated by One97 Communications Ltd., is displayed at a shop selling printer cartridges in Mumbai, India, on Friday, Jan. 27, 2017. Photographer: Dhiraj Singh/Bloomberg

Paytm’s lacklustre listing and its continued underperformance have dented investor sentiment for its smaller unlisted rival MobiKwik, said two traders who specialize in trading shares of unlisted companies.

MobiKwik’s stock was trading at a peak of 1,350 ($18) a share ahead of the opening of Paytm’s initial public offering (IPO) earlier this month, said one of the two traders, who did not wish to be named. The poor response to Paytm’s IPO and an even more disastrous listing moved Mobikwik shares, too, on the downward path. The shares are trading at 900, a nearly 33% plunge from their peak, the trader said.

“As per company policy, we don’t respond to any market speculation. MobiKwik has got regulatory approvals for its IPO and will go public at an appropriate time,” a spokesperson for MobiKwik said in response to an email query.

Shares of, One97 Communications Ltd, which runs Paytm, fell 27% on their market debut on Thursday. The shares have since fallen 36.37% from their IPO price of 2,150 apiece. The sharp sell-off has erased 51,194 crore in investor wealth from the IPO valuation of 1.39 trillion.

“The discouraging response to fintech IPOs of Paytm and Fino Payments Bank triggered the downfall, which got accelerated by the disastrous listing of Paytm,” said Manan Doshi, co-founder, UnlistedArena.com, which deals with unlisted and pre-IPO shares.

Paytm’s 18,300 crore IPO, the biggest in India so far, was subscribed just 1.89 times, while Fino Payments Bank’s public offer was subscribed two times. Fino’s shares are down 31% from their IPO price of 577 apiece.

One Mobikwik Systems Ltd filed its draft papers in July and received the Securities and Exchange Board of India’s nod in October. Its IPO will comprise a sale of new shares worth 1,500 crore and an offer for sale of stock worth 400 crore by its founders and shareholders.

MobiKwik earns revenues mostly from its consumer payments business, payment gateway services, and from its buy now pay later financial product. All these segments have been severely hit by the pandemic. The company’s revenue dropped 19% to 288 crore in FY21 from 357 crore in the previous year. Net loss widened to 111 crore from 100 crore during the period.

Sentiments in the primary market appear to be soured following the weak listing of Paytm and may affect upcoming share sales by startups, analysts say. “We may see the cascading effect in primary markets up to some extent. The three IPOs, Latent View Analytics, Tarsons Products, and Go Fashion look priced on a higher side. However, they have got a decent subscription from all segments because of their comparatively smaller sized issues, which makes a favourable outline for a listing pop if markets stabilize,” said Manan Doshi.

The grey market premium for Latent View Analytics has dropped to 330 from a high of 380, while that of Go Fashion, fell to 450 from 575 and of Tarsons Products to 175 from 255 a share.

“This may lead to a cool-down of the euphoria that we were seeing in the IPO markets recently in terms of listings and the massive subscriptions,” said Aditya Kondawar, COO, JST Investments.

The article was first published on livemint.com

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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).

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  • 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.