India's Biggest Ever Initial Public Offering Crashes 27% On IPO Day

Just like the rest of global equity markets, 2021 has been a monumental year for Indian stocks and it culminated overnight with the nation's biggest ever IPO, when One97 Communications Ltd, the entity that operates Indian digital payments platform Paytm, went public at a price of 2,150 rupees per share, the top of a marketed range. The digital payments company raised 183 billion rupees ($2.5 billion), India's largest ever IPO when measured in local currency, surpassing Coal India's in 2010. That IPO was worth 155 billion rupees ($3.48 billion), according to data from Refinitiv 

Alas, the party then quickly died when PayTM shares opened below the 2,150 rupees ($28.60) issue price, before closing down a whopping 27% at 1,564 rupees ($21).

According to some analysts, the post-break flop reflects fears about Paytm's business: the company, which is now worth almost $14 billion, lost hundreds of millions of dollars last year and seems far from ready to turn a profit. It's also up against growing competition from some of the biggest tech firms in the world.

"The outcome of the IPO was not in doubt," Madhur Deora, the president and group CFO of Paytm, told CNN Business last week. The former investment banker has been with the company for five years.

But the amount of attention it drew took him by surprise. With backing from iconic investors such as Warren Buffett, Masayoshi Son and Alibaba, Paytm is one of India's best funded startups. Its public debut has been keenly watched by professional and amateur investors alike. However, its subsequent plunge was certainly not expected.

A little history.

India has been churning out billion-dollar startups for years, but the rush for those unicorns to go public started only a few months ago.
"A lot of well-wishers and friends messaged [me], saying, 'Oh, I'm getting a prayer done at Golden Temple for Paytm's success," said Deora, referring to the central place of worship of the Sikh religion.

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