Paytm gets Investments from Big Global Funds

The story of Paytm has been a story of extreme volatility in the first 5 days of trading. The stock lost close to 41% from its IPO price of Rs.2,150 to touch a low of Rs.1,271. However, from the lows of Monday, the stock gained around 40% over the next 3 days.

While the stock is still about 18-19% below its IPO price, there is a greater degree of reassurance from the fact that the stock has taken support and bounced back.

If you look at the delivery percentage, the delivery percentage was as high as 42% on the first day and 24% on the second day. However, by the third day the delivery percentage had dropped to 19% and further to 14% by the fifth day.

That only shows that short term trading activity was quite robust in Paytm. But the question is, how did this trading interest come about so suddenly in the Paytm counter.

The reason was concerted buying by some global fund giants. While the funds have not confirmed these details, it has been reported that Blackrock and the Canadian Pension Plan Investment Board (CPPIB) were heavily buying into the counter of Paytm at lower levels.

Both had participated in the Paytm issue as anchor investors and they obviously bought the stocks at lower level to average their price. Anchor investments have a lock-in of 1 month.

Blackrock is the largest and most influential asset manager in the world with assets under management of nearly $9.6 trillion. CPPIB has AUM of $550 billion but has been one of the most active long-only buyers in the Indian markets. 

The very fact that both the anchor investors with a formidable AUM size have been buying into Paytm at lower levels, adds to the confidence surrounding the stock.

When the stock had fallen, the promoter Vijay Sekhar Sharma had been largely unperturbed. He underlined that Paytm was in the digital business for the long haul and were not really intimidated by such price corrections. 

News of some of their biggest anchor investors adding to their positions in Paytm only adds to the interest levels in the stock.

Paytm has been the largest IPO in Indian history at Rs.18,300 crore. The success of the Paytm IPO is not only critical to the Digital India story but also to the sustained interest of global investors and potential anchor investors in Indian IPOs. 

This is more so in the case of digital IPOs. After all, while the FPIs have been consistent sellers in the secondary markets, it is the primary market that has offered an avenue for FPIs to infuse funds into India.