Indian fintech giant Paytm, backed by SoftBank and Alibaba, lost more than 27% in its first day of trading Thursday. The valuation of the firm, which raised $2.5 billion in India's largest initial public offering, stood at $13.6 billion at the close of trading on local stock exchanges, compared to the $20 billion valuation the firm was aiming for. Paytm was valued at $16 billion in private markets when it raised $1 billion in late 2019.
Shares of One97 Communications, the holding firm of Paytm, traded for as low as 1,591 Indian rupees ($21.40), down from the offer price of 2,150 Indian rupees.
Thursday's IPO is the latest in a series of listings by Indian startups as many begin to explore the public markets following years of growth. Indian food delivery startup Zomato, online insurance aggregator Policybazaar and fashion commerce Nykaa have made stellar debuts in the public market this year.
Compared to those of its peers, the early-hours trading for Paytm shares has been disappointing so far. But many industry executives said that day one performance of shares is not the best measure to assess the success of Paytm, which offers a range of services including peer-to-peer payments and a digital bank.
Even as One97 Communications started its journey two decades ago, Paytm was conceived in the past decade.
Taking the bull by the horns, for two decades. Many congratulations @vijayshekhar ! You are an inspiration for the entire country, and a flag bearer of New India’s capitalism! 👏 🙌 🇮🇳 pic.twitter.com/ZVFS9b1pVk
— Rajeev Mantri (@RMantri) November 18, 2021
A decade ago, Vijay Shekhar Sharma flew to Hong Kong to attend an All Things D conference. At the event, he watched Silicon Valley executives Jack Dorsey and Brian Chesky talk about the firms they were building. But the conversation that would change the trajectory of his firm, One97 Communications, was an interview of Alibaba founder Jack Ma.
“That trip taught me what was happening in the mobile payments and commerce spaces in Asia. It was so inspiring to hear Jack Ma speak at the event,” said Sharma in an interview with TechCrunch ahead of the listing.
For the first 10 years of its existence, One97 Communications offered a range of services including domain name registration and VAS for telecom firms. The firm had raised $15 million and was profitable, but Sharma was now convinced that he needed to make a move into payments, he recalled in the interview.
But it was a tough sell for Sharma, as many of his investors wanted him to continue to focus on existing lines of business, according to several people familiar with the matter. After some back and forth with investors, and putting some of his shares on the line, Sharma was given the green light to pursue his ambitious experiment.
That experiment turned out to be a success. Paytm chronicles the mobile payments adoption in India today. “This is not Paytm getting listed. This is India’s youth getting listed,” said Sharma.
The journey for Paytm even after getting the green light wasn’t easy. Over the years, the startup struggled to raise funds and received several buyout offers including from Freecharge and Snapdeal -- all of which it dismissed, according to sources familiar with the matter.
"The support I have received from the industry, from users and everyone else has been unbelievable," said Sharma.
Paytm today competes with a range of firms including Google, PhonePe and Facebook, nearly all of which have gained traction in recent years.
At stake is a fast-growing payments market that could be worth $1 trillion in a few years, up from about $200 billion in 2019, according to Credit Suisse.
The story was updated throughout the day.