Paytm IPO Sails Towards Full Subscription, Offer Subscribed 1.89 Times

The INR 18,300 Cr initial public offering (IPO) of One 97 Communications, which runs fintech giant Paytm ended on Wednesday. Post a moderate response for most of the three-day offer, the IPO was finally oversubscribed backed by a healthy response from institutional investors today (Day 3).

The offer was subscribed 1.89 times, as bids were received for 9,14,09,844 shares, against a total of 4,83,89,422 on offer.

Although the subscription has been much lower than some of the recent blockbuster startup IPOs, including that of Zomato and Nykaa, the slow pace and lower-than-anticipated subscription can be attributed to the sheer size of the offer, given it is India’s largest IPO at INR 18,300 Cr.

• Qualified Institutional Buyers (QIB) who had subscribed the earmarked portion just 46% or 0.46 times by the end of the Day 2, finally booked the allocated shares 2.79 times on Day 3. QIBs placed bids for 7,36,55,310 shares, as against 2,63,94,231 shares put aside.
• Retail Institutional Investors (RII) who have shown good interest since the start of the offer on Monday, bid for 1,46,01,096 shares  (1.66 times), compared to the allocated 87,98,076 shares.
• The Non Institutional Investors (NII) did not  show much interest in the  mega offer and booked only 24% or 0.24 times of the allocated portion. Out of the earmarked portion of 1,31,97,115 shares, NIIs, who comprise of corporates and individual investors (other than RIIs), bid for only 31,53,438 shares.

Analysts noted that Paytm’s large issue meant that its retail size is much larger in absolute terms of value than that seen in recent internet IPOs like that of Zomato or Nykaa. On the first day of the offer, Paytm’s IPO had secured the highest ever retail percentage subscription for IPOs with retail size in excess of INR 1,000 Cr over the last decade.

The company is likely to go public with a $20 Bn valuation. Its shares are expected to be listed on the stock exchanges on November 18.

The company fixed price band of INR 2,085 – INR 2,150 for the IPO which included a fresh issue of INR 8,300 Cr worth of shares and an offer for sale (OFS) of INR 10,000 Cr.

Grey market premiums now suggest that the shares may get listed around INR 60 higher from the issue price band of INR 2,085 – INR 2,150.

On November 3rd, Paytm raised INR 8,235 Cr ($1.1 Bn), in the largest ever anchor round in India. The anchor round was oversubscribed 10 times, by investors including Blackrock, with INR 1,045 Cr investment, CPPIB (INR 938 Cr), Birla MF invested (INR 555 Cr) and GIC (INR 533 Cr).

Another digital payments major Mobikwik, which got the SEBI nod for its INR 1,900 Cr IPO has not yet announced the dates and the price range for its offer.

The much expected startup IPO season for fintech startups started on October 30 with the opening of the Fino Payments Bank IPO. The fintech giant’s offer was subscribed two-times at the end of day 3. The Mumbai-based fintech major is yet to list its shares on the exchanges.

Policybazaar, which opened for subscription on November 3rd, subscribed 16 times. The shares of insurtech unicorn are expected to get listed by November 15.