Paytm’s market cap dips below its $16 billion private valuation

Paytm listed on Thursday at a steep discount to its IPO price, as investors questioned the company’s valuations and path to profitability.
The stock hit a lower circuit of 20% half an hour before closing bell, sliding 27.25% from its issue price of Rs 2,150 to Rs 1,564.15. The market capitalisation stood at Rs 1.01 lakh crore (about $13.5 billion) well below its IPO valuation of Rs 1.50 lakh crore ($20 billion).

That’s also less than the valuation that the Vijay Shekhar Sharma-led startup commanded in its last fundraising round in November 2019.

Paytm was valued at $16 billion
when it raised $1 billion in a funding round led by US asset manager T Rowe Price along with participation of existing investors Ant Financial and SoftBank Vision Fund, according to an ET report on November 25, 2019. It was the largest amount raised by an Indian startup that year.

“It’s a $1 billion raise led by T Rowe Price,” Sharma had said then. “SoftBank has pumped in $200 million while Ant Financial has invested $400 million at a $16 billion valuation.”

Two years on, the company
raised funds in India’s biggest IPO, seeking a valuation of $20 billion. The offering
achieved full subscription on the last day of the share sale, that too after a push by qualified institutional buyers.

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The Paytm IPO was touted by some as a symbol of the country’s growing appeal as a destination for global capital, particularly for technology investors looking for alternatives to China. The question now looming over the $3.5-trillion stock market is whether the optimism that drove IPO fundraising and the Sensex to record highs has gone too far.