The public issue of Paytm’s parent, One97 Communications, received a tepid response, at least compared to the initial public offers (IPO) of new-age companies.
The Rs 18,000-crore initial share sale barely saw full subscription on the final day of bidding—an event the market has become unfamiliar with given the recent rally and an IPO frenzy, especially with tech companies and other startups.
On the final day of bidding, the issue was subscribed 1.9 times. It had gotten off to a slower start with 18 percent subscription on Day 1, and 48 percent on Day 2.
Non-institutional investors (NIIs), comprising high net worth individuals (HNIs), barely responded to the issue. The portion reserved for NIIs was subscribed 24 percent times on the final day. And retail investors subscribed only 1.6 times to the portion reserved for them.
The qualified institutional buyers (QIBs) category saw subscription of 2.8 times on the final day. Paytm had reserved around 2.63 crore shares for QIBs. On Day 1, the QIB portion saw bids for only six percent shares of the shares reserved.
While the IPO found buyers—more so on Day 3 when the majority of the bids come—India's biggest IPO did not receive the over-the-top demand that the likes of Nykaa, Zomato, and PolicyBazaar enjoyed.
In comparison, the IPOs of other new-age, digital companies had fared better. Take, for example, Nykaa’s IPO, which was subscribed 1.5 times at the end of Day 1 of bidding.
The non-institutional investor category had seen subscription of six percent of the shares reserved. Retail investors had applied for over 3.5 times the shares reserved for them. By the end of Day 2, the entire issue was subscribed 4.8 times, with the retail portion booked six times.
On Day 3, the issue was subscribed over 80 times, with QIBs oversubscribing their portion by 91 times, and NIIs overbidding 112 times. Retail investors had subscribed to the issue by over 1.8 times.
While PolicyBazaar IPO wasn’t as hit as Nykaa’s, as the Rs 5,000-pcrore IPO of PB Fintech (the parent of PolicyBazaar and PaisaBazaar) was subscribed 50 percent at the end of Day 1. The retail investor category was oversubscribed by the end of the day. Institutional investors had subscribed to over 0.5 times their reserved portion. NIIs had subscribed to 6 percent of their portion.
The IPO was fully subscribed at the end of Day 2, and the retail portion booked two times.
On Day 3, the issue saw an subscription of 16.5 times. Non-institutional buyers had subscribed to their portion by nearly eight times and QIBs by 25 times. Retail investors had overbooked the issue by 3.3 times.
Zomato was the first startup to list in India in recent times. Regardless, its issue was subscribed 4.8 times on the second day of bidding. Investors had bid for 345 crore shares against the size of 72 crore shares.
Retail investors had already bid for 4.7 times of the portion reserved for them. QIBs had also bid for seven times their reservation. And NIIs had subscribed to 45 percent of their portion.
On the third day, the IPO had received a subscription of 40 times. The retail portion was subscribed more than 78 percent times, the NII portion 35 times, and the QIB portion 55 times.
Zomato, widely scoffed at for rich valuations and continued losses, garnered enough attention from investors. Its shares began their secondary market journey at a premium of 80 percent over the issue price.
Paytm's issue is valued at nearly 50 times the FY21 revenue—an expensive deal when compared with internationally listed peers. That mixed with its super-app like business made it difficult to understand the business.
Analysts had mixed views on the performance. While some said the company marketed itself as what some may call a super-app, offering services from flight booking to stock buying, others felt it may have struggled to sell its business model.
According to a report by Reuters, this performance was on-par with global offerings and showed Indian investors had confidence in new-age, digital businesses.
Meanwhile, Oyo, Delhivery, and PharmEasy are to knock on the doors of the primary market soon.
First Published: IST