SUMMARY
- Paytm founder Vijay Shekhar Sharma has expressed his regret regarding the selection of bankers for the company’s IPO in November 2021.
- Since its listing, the company has witnessed a nearly 60% decline in its share price.
- The situation has been further complicated by inquiries from SEBI.
Paytm founder Vijay Shekhar Sharma has expressed his regret regarding the selection of bankers for the company’s initial public offering (IPO) in November 2021. In a recent interview, Sharma highlighted this as a critical decision that has significantly influenced the company’s trajectory.
Sharma said at Tie Delhi NCR’s India Internet Day 2024 on September 27, “I have been an entrepreneur long enough now. I have a regret of not choosing the correct bankers for the IPO.”
“To enter the temple of God, you need the right priest… perhaps we didn’t choose the right one,” he added symbolically.
Sharma addressed the audience, highlighting the challenges his company has faced since its IPO. He urged other entrepreneurs to heed his advice and emphasized the importance of choosing the right banker.
Since its listing, the company has witnessed a nearly 60% decline in its share price. This downturn has made Sharma’s previous expression of regret all the more intense, especially during a period of thriving stock market conditions and a surge in IPO debuts.
The situation has been further complicated by inquiries from the Securities and Exchange Board of India (SEBI) regarding allegations of factual misrepresentation during the IPO process and adherence to shareholder classification guidelines.
These inquiries specifically relate to Sharma’s failure to comply with norms regarding promoter classification, a matter under investigation by regulatory bodies including the Reserve Bank of India (RBI), following its examination of Paytm Payments Bank earlier this year.
The main issue under scrutiny revolves around whether Sharma should have been categorized as a promoter, given his role in management rather than that of an employee, when filing the IPO documents. Paytm has responded, stating its commitment to ongoing dialogue with regulatory authorities and the provision of all necessary representations to address these concerns.
Sharma said while comparing the fintech’s listing with Infosys, “In NR Narayana Murthy’s time, his driver made Rs 1 crore, but when Paytm listed, at least 20 people made Rs 100 crore,” cites CNBC.
Sharma also reflected on the financial challenges he encountered in the early stages of his entrepreneurial journey. “I did not get VC luck till 7 years of my company starting. My Series A happened in 2007 while in started the company in 2001. So, I am a bootstrapped entrepreneur who had to do a lot cash generation. And in that rush, I learnt one thing, there is nothing called P&L. The real truth is cash, everything else is trash.”
Despite these obstacles, Paytm debuted its IPO in November 2021, with a total issue size of Rs 18,300 crore. The company’s IPO included the issuance of fresh equity shares up to 3.86 crore as well as offerings for sale of up to 4.65 crore equity shares, totalling up to Rs 10,000 crore by the company’s selling stakeholders.
The initial price band for the IPO ranged from Rs 2,080 to Rs 2,150. However, Paytm’s shares saw an opening at Rs 1,950 on November 18, 2021. The IPO was subsequently conducted at a 9.3 % discount to the set issue price, which led to a further downturn, with shares depreciating by 27% from the IPO price by the end of the first trading day.
Notably, Paytm’s valuation has witnessed an evident decrease since its IPO. Originally valued at $19 billion by investors at the IPO, the company’s current valuation stands at approximately $5.1 billion.
