Corporate Review

The wave of IPOs in the financial market

The wave of IPOs in the financial market

Two evident market leaders of their respective industries have issued and announced their IPOs this week, and it has undoubtedly taken the Indian financial market to some fresh hopes and hard cash.

Zomato, one of the best in the business, finally announced its entry into the stock market, and it was able to keep the investors at the edge of their seats for quite a long time.

It didn’t break its expectations but performed much better than expected in its IPO. Real soon, the one-stop platform for almost all kinds of financial transactions, Paytm also announced its IPO, which is also expected to perform beyond all forecasts.

The piece intends to discuss these two IPOs and draw a detailed picture of their impact on the Indian financial market.

What does an IPO brings to the plate?

IPO simply refers to Initial Public Offering, where a privately established company decides to raise funds from the public and become a public limited firm by offering its shares.

The shares are traded in the stock markets, and IPOs are considered as the first step in going public.

Many privately-owned companies having their stakes owned by venture capitalists view bringing in IPOs as an effective method to trade their shares to the public for huge returns and exit from the company.

With Paytm, anticipated to raise the most funds from the public through an IPO, it will break the eleven years record of Coal India, which made an IPO of 15,475 crores in 2010, breaking the bar set by Reliance Power 2 years ago, with an issue size of 11,700 crores.

With Paytm yet to bring in India’s biggest IPO ranging from more than 16,600 crores, and a phenomenal show by Zomato this week, the piece takes a look at the turn of events that led to this.

Zomato – A new dish to deliver

Zomato is indeed the market leader in the platforms dealing with food delivery in India, with a 13 year run in the industry.

This multinational giant of Indian origin currently provides its services in more than 25 countries.

Started at a slow pace, Zomato gradually grew into a strong platform, enhancing its services with a good number of additions.

The pandemic period had a positive impact on Zomato’s run, as it thoroughly commercialized the opportunity. In order to expand its services and penetrate further into the existing markets, Zomato has issued an IPO, resulting in a phenomenal response.

The IPO was issued for a size of 71.92 crores worth of equity shares, which within a couple of days received bids worth 2,751.13 crores, simply 38 times more than the IPO size of the firm.

The retail investors bid an amount worth 7.44 times more than what the IPO was for, and the institutional investors were behind a nearly 33 times bid amount against the allotted IPO.

With an overwhelming rate of public response over the company, the shares will be highly rewarding for the allotted within a decent span of time.

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Paytm – Call for an IPO transaction

Paytm and its subsidiaries are indubitably one of the biggest benefactors of digitalization and India’s gradual adoption of digital currency.

Established in 2010, Paytm, within a shorter span of time, was able to transform the way people engaged in business and even made a huge contribution towards making India move towards the adoption of the paperless currency.

Paytm further added a lot of services to its arsenal, and a strong marketing show put up by them made the market penetration much easy.

The platform currently has more than 20 million merchants using Paytm for their daily transactions.

Paytm is aiming for the biggest IPO issue that the nation has ever witnessed in the 3rd quarter of 2021, with filing papers to raise 16,600 crores in two portions.

With Zomato already paving the way for more IPOs to come, this big step by Paytm is debated all over the markets.

The first portion of 8,300 crores will be of primary share sales, and the rest of the 8,300 will be allotted as an offer for sale, a chance for the present investors to redeem their shares.

With more details flowing in, the IPO of Paytm, too, is expected to create a magnanimous impact in the market.

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