Paytm’s 75% fall in its IPO one of largest in world

The largest digital payments provider in India, One 97 Communications Ltd., which runs Paytm, has seen the worst first-year share decline among major IPOs in the past ten years, and the situation is only getting worse.

One year after its $2.4 billion offering, the largest ever in India at the time, the company, whose founder compared its difficulties to those faced by Tesla Inc. shortly after the listing, has seen its shares lose 75% of its market value. Since Spain’s Bankia SA’s 82% loss in 2012, the decline is the sharpest first-year slide internationally among IPOs that raised at least the same amount, according to data compiled by Bloomberg.

The gloomy first anniversary of Paytm highlights a loss of faith in the company’s capacity to turn a profit after making its debut when India’s IPO market was enamoured with tech startups. It is one of many businesses that are listed with valuations that many people believed to be inflated.

This week, the stock’s losses widened as worries about the emergence of a potential rival owned by India’s largest conglomerate increased. As a lock-up period stipulated in the IPO expired last week, Japan’s SoftBank Group Corp. sold shares it had in Paytm, causing a three-day decline.

With the 30% decrease in November, the decline from the IPO price of 2,150 rupees is now 79%.

According to JM Financial Ltd. analysts lead by Sachin Dixit, tech stocks have fallen across the board as investors dump loss-making companies amid a deteriorating macroeconomic climate.

Although they never traded beyond the listing price, Paytm shares were offered at the top of a marketed range following an offering that generated significant interest from investors and funds. Traditional international stock pickers like BlackRock Inc. and the Canada Pension Plan Investment Board were drawn to the transaction.