Paytm achieved India’s largest IPO tag, footing a staggering bill of Rs. 411 cr as IPO expenses, of which, Rs. 324 cr was paid as fees and commission to 7 investment bankers. The largest IPO meant the largest-ever fees to investment bankers.
With share price down 37% in 2 days, (now to Rs. 1,360 from issue price of Rs. 2,150 per share)post its listing. do the Book Running Lead Managers (BRLMs) have any accountability to company investors? Apparently SEBI is reportedly questioning the bankers. No wonder SEBI, whose key role as regulator of the Indian financial markets, is to protect interest of retail investors, has proposed several changes in IPO, like highlight of buying cost of selling fund as a risk factor, limiting fund raise for unidentified acquisitions, tripling anchor lock-in period etc.
Over the weekend, company, in its quarterly update, said to have disbursed Rs. 627 cr worth of loans in Oct 2021. Equitas Small Finance Bank, with half its book as small business loans, has twice the monthly disbursal run-rate (Q2FY22 disbursal of Rs. 3,145 cr) and is ruling at mcap of Rs. 7,200 cr. Moreover, Paytm’s average ticket size of disbursals is just Rs. 4,500! Even micro finance institutions disburse higher ticket size loans.
Board meeting scheduled on Saturday 27th Nov for Q2FY22 results, but since company’s share of IPO expenses are about Rs. 186 cr, it will increase losses in Q3FY22, which may not change investors’ view on company’s business model in the near term.
But to cover up the disastrous listing, company chief defended that the ‘business model’ was not well-understood by the investors. CEO seen justifying unjustified pricing
Will the PayTM CEO & CFO will accept irrational pricing, or keep rubbing salt on the wounds of the retail investors, having lost 37% in 2 days day of listing itself, by calling them immature in understanding the potential of the company? As stated here yesterday, Public hai sab jaanti hai.
So, give up the arrogance Mr. CEO and Mr. CFO
PS: After yesterday’s closing, company’s largest shareholder Antfin is sitting on 25% MTM loss (Rs. 1,833 cost per share), while Warren Buffet’s Berkshire Hathway is marginally in the green on its 3 year old investment (having cost of Rs. 1,280 per share).
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