Paytm, an Indian fintech company backed by SoftBank and Alibaba, dropped more than 27% on its first day of trade on Thursday. The business’s worth was $13.6 billion after the closing of trading on local stock markets, compared to the $20 billion valuation the firm was aiming for after raising $2.5 billion in India’s largest initial public offering.
When Paytm raised $1 billion in late 2019, it was valued at $16 billion in private markets. Paytm’s parent company, One97 Communications, fell as low as 1,591 Indian rupees ($21.40), down from the offer price of 2,150 Indian rupees.
The IPO on Thursday is the latest in a succession of public offerings by Indian companies, as many of them begin to explore the public markets after years of rapid development. This year, Indian meal delivery service Zomato, online insurance aggregator Policybazaar, and fashion retailer Nykaa all made strong public market debuts.
Paytm’s early-hours trade has been lackluster in comparison to that of its counterparts thus far. Many industry professionals, however, believe that the stock’s performance on the first day not the greatest indicator of Paytm’s success, which includes peer-to-peer payments and a digital bank.
Paytm created in the last decade, even though One97 Communications began its journey two decades earlier. Vijay Shekhar Sharma traveled to Hong Kong for an All Things D conference a decade ago. He sat in the audience and listened to Silicon Valley CEOs Jack Dorsey and Brian Chesky discusses the companies they were launching. But it was an interview with Alibaba founder Jack Ma that would transform the course of his organization, One97 Communications.
“That journey educated me a lot about what was going on in Asia’s mobile payments and commerce arenas.” Hearing Jack Ma speaks at the event was extremely encouraging,” Sharma remarked ahead of the listing in an interview with TechCrunch. One97 Communications provided a variety of services over the first ten years of its existence, including domain name registration and virtual assistant services for telecom companies. Sharma noted in the interview that the company had raised $15 million and was successful, but he was now sure that he wanted to move into payments.
According to numerous people familiar with the situation, it was a difficult sell for Sharma since many of his backers wanted him to stay focused on established areas of business. Sharma has given the green light to undertake his ambitious experiment after some back and forth with investors and putting some of his shares on the line. That experiment was a resounding success. Paytm tracks the current state of mobile payments in India. “Paytm isn’t going to be listed.” “This is a list of India’s young,” Sharma explained.
Even after receiving the green light, Paytm’s route was not simple. According to individuals familiar with the situation, the business struggled to acquire financing over the years and received multiple acquisition proposals, notably from Freecharge and Snapdeal, which it turned down.
“The amount of love I’ve had from the industry, users, and everyone else has been incredible,” Sharma added. Paytm now competes with a number of companies, including Google, PhonePe, and Facebook, almost all of which have grown in popularity in recent years. According to Credit Suisse, the fast-growing payments business might be worth $1 trillion in a few years, up from around $200 billion in 2019.