Wednesday, June 7, 2023
Support Our Journalism
HomeEconomyPaytm IPO could prove to be a 'very high-risk bet', says fund...

Paytm IPO could prove to be a ‘very high-risk bet’, says fund manager

Paytm’s IPO comes at a time when India has seen a spurt of technology unicorns listing recently, with the stock markets rallying to record highs.

Text Size:

Mumbai: Investing in Indian fintech company Paytm could prove to be a “very high-risk bet” and might not see a sizable jump when it lists on stock exchanges, a fund manager said on Tuesday.

“In Paytm’s case, where there is the strength of the network effects — it’s the largest digital payments from a merchant’s perspective — it has a long runway to capitalize on that and hopefully generate some profits along the way,” Rakhi Prasad, an investment manager with Alder Capital told Bloomberg TV’s Haslinda Amin and Rishaad Salamat.

“These are very high risk bets” she added, over the medium- to long-term horizon. “Nothing is really going to happen in the short-term. I would say demand will come through but maybe not a big listing pop that we may have been seeing in some other companies.”

The Ant Group-backed company’s $2.5 billion offering, which opened Monday, is the biggest initial share sale in India and will close on Nov. 10 with the price range set between 2,080 rupees ($28.147) and 2,150 rupees per share. It has drawn a strong response from anchor investors like BlackRock Inc. and the Abu Dhabi Investment Authority.

While the fintech company, whose name rhymes with ATM, faces stiff competition from Alphabet Inc.’s GooglePay and Walmart-backed PhonePe, it has the largest share of India’s merchant payments market. According to GlobalData, the Indian mobile payments market will be worth more than $2 trillion by 2024.

Paytm’s initial public offer comes at a time when the world’s second-most populous nation has seen a spurt of technology unicorns listing recently, with the stock markets rallying to record highs. Food delivery startup Zomato and beauty startup Nykaa’s initial public offerings were fully subscribed on the first day, pointing to immense retail investor interest in the space. –Bloomberg

Disclaimer: Vijay Shekhar Sharma is an investor in ThePrint. You can read our full list of investors here.

Also read: Paytm’s raw power of data — what BlackRock is seeing in India’s biggest IPO


Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular