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Paytm IPO, India’s largest ever, seen as a ‘high-risk’ bet for investors – Economic Times

Mumbai: Investing in Paytm’s initial public offering (IPO),
billed as the biggest in India’s corporate history, 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 platform from a merchant’s perspective — it has a long runway to capitalise 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 said, 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 Nov. 8-10 Paytm IPO, which
seeks to raise at least $2.5 billion by offering shares in a price band of Rs 2,080-2150 at a valuation of $19.5-20 billion, has seen a muted response so far — 18% subscription on day one and 36% as of 1:30 pm on day two. But
it has drawn a strong response from anchor investors like BlackRock Inc. and the Abu Dhabi Investment Authority (ADIA), and investor SoftBank Group Corp.’s CEO Masayoshi Son
is bullish on its prospects.

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

The Paytm IPO 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. The initial share sales of foodtech firm
Zomato and cosmetics etailer
Nykaa were fully subscribed on the first day, pointing to immense retail investor interest in the space.


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