Paytm Lock-in Period Ends for Anchor Investors

In the last few months, large stocks have come under pressure on the date of completion of anchor lock-in. Anchor investors are allotted shares a day ahead of the IPO opening at the IPO price with a lock-in period of just 1 month.

It has been observed that when the 1-month lock-in period gets over, there is normally a rush to book out of such issues. On 15th December, the 1-month anchor lock-in for One97 Communications (Paytm) got over.
Paytm may not have been a very successful IPO in terms of subscription and in terms of post listing performance.

However, the anchor lock-in syndrome has hit most of the large listings in the Indian market. Zomato came under pressure on completion of anchor lock-in as did the stock of Nykaa. Just a couple of days back, PB Fintech (Policybazaar) almost fell close to its issue price due to the completion of the anchor lock in period. But, what about Paytm.

On the NSE, Paytm opened on 15-December gap-down at Rs.1,421 against the previous close of Rs.1,496; a fall of 5.01%. However, that was the just the beginning. Fears of heavy anchor selling pressure led to pressure on the stock as it dipped to a low of Rs.1,296 during the day, a point-to-point intraday fall of 13.37%. However, the stock did manage to recover from lower levels on the back of buying and short covering at lower levels.

If one looks at the trading volumes on the Paytm counter, NSE saw a total of 1.31 crore shares change hands on 15-December valued at Rs.1,797 crore. Paytm was the most active stock in terms of value on the NSE and the eventual fall in the stock by 7.63% at close indicates that there was a good deal of anchor selling pressure during the day. However, some of the key anchors like Blackrock and CPPIB had bought earlier on the day of the fall.

It may be recollected that out of the total issue size Rs.18,300 crore for Paytm IPO, it had collected Rs.8,235 crore from anchor investors which translates into outstanding anchor shares of 3.83 crore available for sale. However, the question is how many anchor investors would be really keen to sell out of the stock at a time when it is nearly 35% below its IPO issue price of Rs.2,150. 

In fact, stock market insiders have admitted that anchor investors have been more interested in booking out where there has been substantial profits on the table. In the case of Zomato and Nykaa, anchors had incentive to sell due to the profits on the table. Paytm is a different ball game due to the huge discount to the issue price. The next few days would give a clearer picture on the anchor front.