Retail Interest: Paytm IPO subscribed 18% on Day 1

The retail investor quota was subscribed 78% on the first day of bidding, garnering ₹1,479 crore, while the portion for non-institutional investors was subscribed 2% and that of QIBs subscribed 6%.

India’s largest initial public offering of the shares of One97 Communications, the parent company of Paytm, was subscribed 18% on the first day, having received bids for 88.23 lakh equity shares against 4.83 crore shares offered, data from exchanges showed on Monday.

The retail investor quota was subscribed 78% on the first day of bidding, garnering ₹1,479 crore, while the portion for non-institutional investors (NIIs) was subscribed 2% and that of qualified institutional investors (QIBs) subscribed 6%. The issue will close on November 10 and the company is expected to list on the exchanges on November 18.

Earlier on November 3, the company successfully closed its anchor book after raising ₹8,235 crore from top anchor investors, including the government of Singapore. After the anchor allocation, the issue is already subscribed 45%. Analysts expect the share sale to sail through as 75% of the portion is reserved for QIBs.

The company plans to raise ₹18,300 crore via the share sale, consisting of a fresh issue of shares worth ₹8,300 crore and shares worth ₹10,000 crore will be offloaded by existing shareholders at an upper price band of ₹2,150 per share. Retail investors can bid for a minimum of one lot of six shares and in multiples thereafter. The firm has proposed to use the net proceeds from the IPO for acquisitions, new business initiatives and to strengthen the payments ecosystem.

Brokerages have offered a mixed rating for the country’s largest IPO looking at the rich valuations of the company, raising an alarm, whereas the future growth prospects remain strong as digital will turn out to be one of the most important modes of payment and other services in coming years.

“For the current valuations to sustain, the company has to remain on the path of high growth trajectory for revenues for a period of three years at least. All three verticals have to keep on firing at an accelerated pace,” KR Choksey said in a report.