T Rowe Price MFs mark up Paytm valuation by 16% ahead of IPO

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Mutual funds managed by US-based investment management firm T Rowe Price have marked up fintech unicorn Paytm’s shares by over 16% from the original acquired price, according to filings that ET has reviewed.

At least two mutual funds priced Paytm shares at $295 apiece at the end of the June-quarter compared to the original $254. The increase is nearly 57% if one compares it with the valuation in the year-ago quarter, when shares were marked down to $188.

T Rowe Price, which has invested in major publicly listed technology firms like Zoom and Coupang, first
invested in Paytm in 2019 as part of a $1 billion funding round.

Paytm, backed by Japan’s SoftBank and China’s Alibaba, has
filed for a $2.2 billion IPO, which is expected in November. The Noida-based company was last valued at $16 billion.

A spokesperson of T Rowe Price said it had no comments to offer, while a Paytm spokesperson declined to comment.

For the quarter ending March 2021, December 2020 and September 2020, Paytm shares were valued at around $255, recovering from the significant markdown in the June quarter last year.

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Mutual funds review the valuation of their investments each quarter.

This is based on a combination of factors including global market conditions.

These valuations are indicative of the current pricing and outlook of the investment funds of these companies, especially ahead of its IPO.

Previously, several top homegrown startups such as Flipkart and Ola had seen their valuations marked down significantly amid turmoil in the global markets, although they had recovered gradually.

Paytm ValuationETtech

This comes at a time when Paytm has seen a relatively faster recovery in overall payments volumes through its platform compared to the slowdown in the wake of the Covid-19 outbreak’s second wave.

For the financial year ending March 2021, Paytm’s parent entity, One97 Communications, reported a 14% fall in revenue from operations to Rs 2,802 crore, while losses narrowed to Rs 1,701 crore from Rs 2,942 crore in FY20.

Paytm’s IPO is expected to be one of the biggest in India and current review by T Rowe Price is an indicator of the momentum it has gained in the run-up to the listing.

In 2016, Walmart-owned Flipkart
went through several markdowns from the likes of Morgan Stanley and Fidelity who slashed its valuation to $5.6 billion.

Mutual funds managed by Valic Co, too, had cut its valuation twice that year before restoring it to over $11 billion when Flipkart last raised capital at a private market valuation of little over $15 billion. Two years later,
Flipkart was acquired by Walmart at a valuation of $22 billion.

Meanwhile, Paytm has moved its payments gateway business to a new subsidiary called Paytm Payments Services to comply with the Reserve Bank of India’s guidelines, according to sources aware of the matter. It has also sought approval from shareholders for the same.



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