According to persons familiar with the situation, several of the biggest investors in Paytm’s record-breaking initial public offering increased their positions in the Indian fintech powerhouse after shares dropped by as much as 41%. According to the people, who asked not to be identified, because they were disclosing private information, BlackRock Inc. and Canada Pension Plan Investment Board were among the so-called anchor investors in the IPO that bought additional Paytm shares on Tuesday and Wednesday.
On Thursday, the stock rose for a third day, rising as much as 7% before closing 2.5 percent higher at 1,796.55 rupees in Mumbai. That’s still a long way from the initial issue price of 2,150 rupees. The extent of anchor investors’ purchases this week could not be determined immediately. BlackRock and CPPIB representatives declined to comment. Paytm’s initial drop was one of the worst for a major technology business since the late 1990s dot-com boom. Any indication that influential money managers such as BlackRock are doubling down on the company could help calm concerns about the sustainability of an Indian stock-market boom that has attracted $17 billion in foreign inflows and sparked a trading frenzy among local individual investors over the past year.
While major investors such as Warren Buffett’s Berkshire Hathaway Inc. and Masayoshi Son’s SoftBank Group Corp. are among Paytm’s owners, several analysts have questioned the company’s valuation and route to profitability. The price objective for Macquarie Capital Securities (India) Ltd. is 1,200 rupees, which is around 32% lower than the stock’s closing level on Wednesday. Paytm CEO Vijay Shekhar Sharma, who has made no secret of his aim for his business to break Coal India Ltd.’s long-standing IPO record set in 2010, stated last week that the stock’s early decline was “no indicator of our company’s value.” In an interview, Sharma stated, “We are in it for the long haul.” “We’re going to put our heads down and get to work.”
Morgan Stanley, Goldman Sachs Group Inc., Axis Capital, ICICI Securities, JPMorgan Chase & Co., Citigroup Inc., and HDFC Bank Ltd. coordinated the $2.5 billion offering of Paytm, formerly known as One 97 Communications Ltd.