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Paytm stock market listing means greater scrutiny, compliance burden

Paytm stock market listing means greater scrutiny, compliance burden

The compliance and governance burden will increase for Paytm as they have to make quarterly disclosures of performance and shareholders, and disclose any price-sensitive information to the market

At the last private market fundraising exercise in 2019, Paytm was valued at $16 billion At the last private market fundraising exercise in 2019, Paytm was valued at $16 billion

The public listing of Paytm in the country's stock exchanges means greater public scrutiny on profitability, cash flow, and business performance.

So far, the Noida-headquartered fintech company was in the private market for raising resources. "The private market always values a business based on its customer base, network, and potential scale. This is already built in the current valuations," says an investment banker.

But the compliance and governance burden will increase for the company as they have to make quarterly disclosures of performance and shareholders, and disclose any price-sensitive information to the market.

Despite Paytm consistently making losses, the private market is expected to bring in the capital.  At the last private market fundraising exercise in 2019, the company was valued at $16 billion. The current valuation is expected to be around $24 billion.

The public market, which include retail as well as institutional investors like mutual funds and financial institutions,  could lift the Paytm stock to a higher price, and move to a lower level once the frenzy dies down. The stock indices are already at an all-time high.  

There is no other peer in the share market which offers an entire gamut of financial services from payments, lending, investments to insurance. ICICI, HDFC , Kotak, and SBI Group which are into banking, mutual fund, insurance, and other financial services business are close parallels but scale and customer segment differ.

Paytm's holding company One97 Communications's Rs 16,600 crore initial public offering (IPO) will be a mix of fresh issues of capital and offer for sale by existing shareholders.

The Sebi will review the draft document for adequate disclosures and give its observations to the merchant bankers -- JPMorgan Chase, Morgan Stanley, ICICI Securities, Goldman Sachs, Axis Capital, Citi, and HDFC Bank. Sebi generally takes a month to process the document and give a go-ahead.

Big global investors Softbank, Ant Financial, AGH Holdings, SAIF Partners, Berkshire Hathaway, T Rowe Price, and Discovery Capital have an equity stake in the company.  

Also read: Paytm files DRHP for Rs 16,600-crore IPO