CPPIB doubles up on Paytm IPO with ₹1,280 cr bid; Retail Book Oversubscribed

Retail book, costing approx. ₹1,830 crore, 123% subscribed at the end of the day on Tuesday.

Overall, the IPO saw a subscription of 48% on the second day. It was subscribed just 18% on Monday.

The share of share sales reserved for institutional investors was subscribed 46%, while high net worth individual book subscriptions accounted for only 5%.

To be sure, the Paytm IPO got a boost on Tuesday, as Canadian pension fund CPPIB doubled its bet on the company, with a bid of around Rs 1,280 crore, said a person aware of the details of the share sale.

CPPIB also participated in the anchor book allocation of the IPO a day before the opening of the offering to the wider investor universe.

Spokesmen for CPPIB and Paytm could not be immediately reached for comment.

Paytm has kept the price of its shares in the range ₹2,080-2,150, Company Valuation ₹1.39 trillion at the top end. The sale of shares will close on November 10.

The share sale includes a recent issue of ₹Proposal for sale up to Rs.8300 crore and above ₹10,000 crores.

Offer for sale or secondary share sale involves the sale of shares up to Rs 402.65 by Vijay Shekhar Sharma. ₹Up to Rs 4704.43 crore by Antfin (Netherlands) Holdings ₹784.82 crore by alibaba.com Singapore e-commerce, up to ₹75.02 crore by Elevation CapitalV FII Holdings, up to ₹64.01 crore by Elevation Capital V Ltd., ₹1327.65 cr by Saif III Mauritius, ₹563.63 crore by Saif Partners, ₹1689.03 crore by SVF Partners and ₹301.77 crore by International Holdings.

The record-setting initial share sale has received a mixed response from analysts, who called it a good bet to ride India’s fintech wave, but also pointed out that the IPO appears to be priced expensive.

“At the upper end of the price band, Paytm is valued at 49.7 times FY2011 revenue. While the valuation may sound costly, Paytm is well positioned to benefit from the exponential growth in mobile payments between FY2011 and FY26 and hence the valuation is reasonable,” said Jyoti Roy, equity strategist at Angel One Ltd.

Paytm had negative cash flow from operating activities for FY19, FY20 and FY21, mainly on account of operating losses and additional working capital requirements.

Analysts at ICICIDirect said, “Any future negative cash flows could adversely affect the results of operations and financial position.

Ashwath Damodaran, a professor of finance at New York University’s Stern School of Business, said in his October 4 blog that almost all of Paytm’s value comes from future expectations, and with significant uncertainty on every single dimension, it should be no surprise. Doesn’t matter if the estimated value range is too high, with a 3% chance that the company’s equity is worth nothing more ₹2 trillion (about $27 billion) at the 90th percentile.

“Even if you are on the side of the company and it is undervalued, it would be hubby to center your portfolio around this stock. In other words, this is the type of stock in which you would invest 5% or maybe 10% of your portfolio, not 25% or 40%,” he said.

If he has invested in Paytm, he will not only have to be at the right price, i.e., trading at less than ₹1.5 trillion (about $20 billion)” but also acknowledging that this may not be a passive (buy and hold) investment, but one that will require active participation and monitoring of the company’s actions and performance, ” They said.