Paytm shares risen from Rs 11,000 to Rs 21,000 in grey market,after announcement of its IPO plans

The Paytm stock has been in great demand in the grey market ever since the company announced its plan to launch an initial public offering (IPO). The stock price has risen from Rs 11,500 to Rs 21,000 over the past few days, however, no one is selling them now despite people willing to buy it. Angel broking has also tweeted about this.

“Last week, we sold Paytm stock to investors between Rs 11,000 and Rs 12,000. The last trade we did in these shares was two days back at Rs 21,000. Since then, there are no stocks available for purchase,” 

Paytm, India’s leading digital payments provider, is aiming to list around Diwali, sources informed CNBC-TV18. The DRHP filing will be done in June-July and the company is aiming for a valuation of over $25 billion, they said.

The startup will be backed by some of the biggest investors such as Berkshire Hathaway, Soft Bank, Ant Group.

Among Paytm shareholders, Alibaba’s Ant Group have  (29.71 percent shares), Softbank Vision Fund (19.63 per cent), Saif Partners (18.56 per cent), and founder Vijay Shekhar Sharma (14.67 per cent). AGH Holding, T Rowe Price and Discovery Capital, and Warren Buffet’s Berkshire Hathaway hold less than 10 per cent stake in the company.

“One thing to be cautious of here is that Paytm hasn’t decided on an issue price yet, so it may very well happen that the price being paid now in the unlisted market may be very much higher than the IPO price,” Aditya Kondawar, Founder, COO, JST Investments, told a News portal. Kondawar further said that a similar thing had happened in Barbeque-Nation, as its 2018 pre-IPO price was Rs 1,100 (price corrected to 600 eventually), with IPO coming in at Rs 500. Moreover, pre-IPO shares come with a one-year lock-in period.

Paytm has warded off stiff competition from global players including Walmart’s PhonePe, Google Pay, Amazon Pay and Facebook’s WhatsApp Pay. Upon successful launch of IPO, Paytm would be the largest such offer. The Rs 15,200-crore Coal India’s IPO launched in 2010 is the country’s largest public issue to date.

It would be keen to watch if Paytm would really get such valuations as the company is still loss-making. The space is highly disruptive as Paytm is facing tough competition from Google Pay and Phonepe which have established themselves very well in the last few years. 

“Currently, very limited deals are taking place in unlisted markets due to low supply of shares. Before the IPO, the company may take corporate action like bonus or shares split,” Abhay Doshi said.

Paytm is one of the established players in the Fintech space with a deep market penetration and share. The company, which started as a payments interface, also got into alternate banking by becoming a payments bank.

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