SUMMARY
The feature designed to help retail investors apply for IPOs outside conventional IPO processing hours
Users can place IPO orders 24x7 on days when the “pre-Open IPO Application” is enabled. Zomato IPO is currently live with this feature on Paytm Money
Feature likely to help balance and distribute the load experienced by market systems and players during IPO Open days
Fintech decacorn Paytm’s stocks and mutual fund investment platform Paytm Money has announced the launch of a feature which allows users to apply for initial public offerings (IPOs) before the actual IPO opening in the markets.
Restaurant aggregator Zomato is the first IPO launched on Paytm Money and it has already received thousands of applicants on the platform over the last two days, the company said. Paytm Money claims to be the first digital broker in India to offer this functionality, and expects this to significantly increase the participation of retail users in IPOs via its platform.
Conventionally, IPO applicants (retail investors) are able to apply for an IPO only during select market hours over a window of 3 days. A large proportion of the investing community does not trade actively and misses out on some of these IPOs. This is particularly true in case of millennials and young investors. The “Pre-IPO Open application” feature was specifically designed to make the lives of such users better.
A user can now place an IPO order 24×7 on days when the “pre-Open IPO Application” Feature is enabled. The order is recorded on Paytm Money’s system, and sent to the exchange for processing whenever the IPO opens. The user is notified of her application status throughout the journey, to ensure a seamless experience.
There is also the issue of congestion in servers/networks experienced by some market participants during popular IPOs, driven by high demand during a short time span. As this feature gains traction, it might be possible to spread out the Pre-Open IPO Applications evenly during the market hours, reducing load on exchanges and payment gateways, and ensuring a better experience for broad market participants.
“Interest in IPOs has surged over the last couple of months, and we have seen cases where users have missed out from applying because of issues like tight schedules during market hours, and demand-led processing delays in the markets. We wanted to make the lives of our users easier and ensure that they don’t miss out on good opportunities,” says Varun Sridhar, CEO of Paytm Money.
Paytm Money users can complete IPO applications with a single click, apply via the shareholder category, and also track live IPO subscription numbers. The company has also ramped up its rewards and incentives with a INR 50 Cr allocation for merchants and users on the platform in the run up to its own IPO.
Startup IPO Wave
Digital payments giant Paytm, operated by One97 Communications, is planning on filing a draft red herring prospectus today (July 12) for a domestic IPO that is aimed at raising $2.3 Bn. The money will be raised by the sale of new Paytm stocks as well as secondary offerings of shares at an expected valuation of $24-25 Bn with an option to raise the amount at a later stage if required.
The planned IPO is expected to include a fresh issue of equity shares by the company and an offer-for-sale of equity shares by the existing shareholders of the company.
This could be the largest IPO debut in India in a year in which food aggregator Zomato and used cars marketplace CarTrade, epharmacy startup PharmEasy, beauty ecommerce brand Nykaa and insurtech startup PolicyBazaar are likely to list publicly. Zomato’s IPO is opening for subscription on stock exchanges at a price band of INR 72 – INR 76 per share on July 14 and closes on July 16.
