Biggest IPO, biggest crash: Paytm shares plunge 27.4% on debut, Zomato to invest $500 Mn in Grofers, Funding Deals & more.
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Biggest IPO, biggest crash: Paytm tanks 27% on Day 1😢
Shares of Paytm’s parent firm One97 Communications tumbled more than 25% on its first day of trading today, as investors questioned its lack of profits and lofty valuations in the country’s largest IPO ever.
Paytm’s stock was trading on the grey market at a premium of just Rs 20-25 on Wednesday, which indicated that its listing would be less than stellar. But a 27.4% fall in the share price at the end of the first trading day surprised even the company’s biggest critics.
Shares changed hands at Rs 1,614 in the afternoon trade, down from the offer price of Rs 2,150, valuing the firm at about $14.2 billion. That’s less than the $16 billion Paytm was valued at two years ago, in November 2019.
Paytm founder and CEO Vijay Shekhar Sharma, who was visibly crying with joy at the opening ceremony, later told that this should be only seen as its “first day” on the markets and not be taken as the company’s long-term performance.
Paytm’s flop debut comes after a string of successful listings by Indian tech startups. Shares of Zomato had hit the upper circuit on its listing day before ending the trading session 66% higher, while Nykaa’s stock nearly doubled from its issue price on its market debut.
Three of the seven Indian tech startups that have gone public so far this year—CarTrade, Fino Payments Bank and now Paytm—ended their first sessions down from the listing price. While CarTrade’s stock plunged 7.29% on the first day, Fino’s fell 5.5%.
Retail Investors after Paytm’s plunge
- Enterprise skilling startup Disprz has raised $13 million in a Series B funding round led by Dallas Venture Capital and Mars Growth Capital.
- Foodlink, a luxury catering company, has raised $8 million (Rs 59.34 crore) in funding led by Plutus Wealth Management.
- Fintech startup Defy has raised $5.5 million (around Rs 40.79 crore) in a seed funding round to build India’s first social crypto exchange. The fundraise was backed by Y Combinator, Goat VC, JAM Fund and Goodwater Capital.
- Healthtech company K&L Wellness Technology Pvt. Ltd has raised ₹30 crores as part of its seed round from angel investors.
- Edtech startup Inzpira has raised Rs 2.3 crore as part of its seed funding. The round was led by angel investors Raj Nair, Chairman, Avalon Consulting, and Gopinath Latpate, Executive Director, JLL.
Zomato in talks to invest $500 million in Grofers for quick commerce play💰
Zomato, which invested $100 million in Grofers in August, is now in talks to put another $500 million in the online grocery platform.
If the deal goes through, this will be Zomato’s single largest investment in a company. It marks an extension of Zomato’s battle with Swiggy into the quick commerce segment, which has been attracting huge investments globally.
The funding will likely value Grofers at around $1.5 billion, the sources said, up from $1 billion when Zomato invested $100 million. It will also raise Zomato’s holding in Grofers to about 30%. Grofers’ biggest shareholder is SoftBank Vision Fund, which holds almost 45% of the company.
The Deepinder Goyal-led Zomato which had a bumper listing on the Indian bourses in July has been on an investment spree. It has backed startups such as Shiprocket, Magicpin and Curefit, as part of its strategy to deploy $1 billion in young companies.
Zomato’s move to double down on the fast-growing quick delivery segment comes on the back of rival Swiggy prioritising Instamart, which specialises in grocery deliveries in 15-30 minutes.
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