Paytm’s grey market price up by 70 per cent after IPO news

The price of the unlisted shares of fintech company Paytm has increased by 70 per cent after it was reported that the company is planning to bring in an Initial Public Offering(IPO) by the end of the year. The IPO, if it gets through as planned will be among the largest IPO’s in the country.

It may be recalled that Paytm’s board members, in a meeting on May 28, had given their approval to the IPO. The company is expected to go public in the September-December quarter of the current financial year.

Following the news of the IPO, Paytm’s share price in the grey market increased to Rs 18,500 from Rs 11,000 a week back, according to an Economic Times report. Here, it is worth noting that grey markets are an unofficial marketplace where trades are not regulated by the Securities and Exchange Board of India(SEBI). While shares are traded, no delivery of stocks takes place in the grey market before listing. In place, a future/forward contract is made between two parties.

Paytm’s share price had touched the milestone of Rs19,000 earlier in 2020.

The digital payments company was valued at $16 billion as of 2019 when it raised $1 billion from Softbank and Ant Financial. With the IPO, it plans to double its valuation. The current share price would put the company’s valuation at $ 15.5 billion which is lower than its 2019 value.

According to Sambhav Aggarwal of Arms Securities, the last few days have witnessed a huge rush to get Paytm’s shares after the IPO news. As per his statement to moneycontrol, “Shares which were traded at around ₹11,000 till early last week are currently traded above ₹18,000.”

 

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