Not just small investors, even Alibaba-owned ANT Group and Softbank have lost money on Paytm
- The shares bought by ANT Group, an associate company of Alibaba, just before the IPO had lost nearly ₹16,012 crore (over $2 billion) of their value in the first two months of Paytm’s listing.
- The company has bought shares worth ₹33,600 crore in Paytm at an average price of ₹1,833, which is the highest among all institutional investors.
- If ANT Group had sold all its shareholdings in Paytm during the IPO, it would have got ₹39,400 crore ($5.2 billion) in return.
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AdvertisementAll the retail investors who lost money on Paytm’s public issue, it may bring you some solace that even the company’s largest and one of the oldest backers from the Alibaba Group’s wealth fell on the fear of missing out despite being an investor in the digital payments giant for the last six years.
The shares bought by ANT Group, an associate company of Alibaba, before the initial public offering (IPO) — at an average cost of ₹1,883 apiece — lost nearly ₹16,012 crore (over $2 billion) of their value in the first two months of Paytm’s listing. So far, there has been no public report of ANT selling Paytm shares since the listing.
Now, Macquarie has said that the stock could fall to ₹900 in the next one year, down another 24% from Monday’s closing price.
If ANT Group had sold all its shareholdings in Paytm during the IPO, it would have got ₹39,373 crore ($5.3 billion), leading to a profit of ₹5,800 crore ($782 million).
Alibaba’s affiliate had sold nearly 3% of its shareholdings for ₹4,704 crore (nearly $630 million), but it still owns 24% shareholdings in Paytm that are now worth ₹ 18,657 crore by Monday market closing (January 10).
The value of the residual stake in Paytm could have been worth ₹34,669 crore if the digital payments giant had maintained its IPO issue price of ₹2,150.
Source: Paytm’s filings, Business Insider calculations
|Pre-IPO Average Price||Total Investment||Value of residual shareholding*||Value of shares sold in IPO**||Gross Loss, at ₹1,157|
|ANT Group||₹1,833.30||₹33,600 crore||₹18,657 crore||₹4,704 crore||₹16,012 crore|
*The value of remaining shareholdings has been derived based on the closing price of Paytm’s shares (₹1,157) on January 10.
**Shares in the IPO were sold at ₹2,150.
Business Insider had earlier reached out to Paytm and ANT Group to seek its comments for this article.
Paytm has lost more than $10 billion in market cap in the last two months of trading. The company was last valued at $10 billion (₹76,094 crore) on January 10 versus $19.9 billion in its IPO.
"Paytm’s payment business accounts for about 70% of revenue, which will be under threat if there are any regulatory changes . Also, its entry into insurance sectors has been rejected by regulators. The stock is trading at about 17 time FY23 sales which seems overvalued considering higher expenses and risk of attrition of senior executives," Manoj Dalmia, Founder and Director at Proficient Equities Private Limited, said.
Alibaba, on the other hand, has reported a net profit of ₹3,727 crore ($500 million), since its average cost of acquisition of equity shares was ₹583 only. The company still has shareholding worth ₹4,701 crore ($635 million) in the company, calculated based on the January 10 closing price of ₹1,157. This could have been worth ₹8,736 crore ($1.1 billion), at the IPO issue price. But ANT didn’t sell all its shares in the IPO.
|Shareholder||Existing shareholding||Value of existing shareholding now, at ₹1,157||Value of existing shareholding, at IPO issue price of ₹2,150|
|ANT Group||24.7%||₹18,657 crore ($2.5 billion)||Over 34,669 crore ($4.6 billion)|
|Alibaba||2.4%||₹4,701crore ($635 billion)||₹8,736 crore ($1.1 billion)|
Japanese investor SoftBank sold majority of its shareholdings from SVF Panther (Cayman) Limited in the IPO, giving it an exit of ₹1,689 crore ($226 million).
However it still owns about 17% stake in the company through SoftBank Vision Fund India. They would have made ₹24,351 crore if they completely exited the company during the IPO, but the value has now dropped to ₹13,104 crore.
|Shareholders||Shareholding pre-IPO||Shareholding post-IPO|
The average price paid by SVF India Holdings (Cayman) Limited to acquire a share of Paytm has not been disclosed as it was not selling any shares during the IPO.
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