The new-age tech companies are seeing a sharp fall in their stock prices as pre-IPO investors are offloading their holdings as the lock-in period ends. Stocks including Paytm, PB fintech, Nykaa, and Delhivery have come under pressure this month as the early investors in the companies, including private equity funds, investment funds, and high-net-worth individuals (HNIs), are now withdrawing their holdings.
Delhivery, Paytm, PB Fintech, Nykaa: How four unicorn startup stocks came under pressure after their lock-ins expired
Shares of Delhivery, a logistics service provider, slips nearly 2% on Monday, November 21 after CA Swift Investments sold a 2.5% stake in the company for ₹607 crore as the stock's pre-IPO lock-in period ended on the same day.
CA Swift Investments held a 5.07 per cent stake in the company as of the end of the third quarter, according to shareholding data filed with the exchange.
According to media reports, as the lock-in period expired, up to 82.42 percent of the shareholding, or 598 million shares, is now free to be sold.
On Wednesday, the stock plunged 5.32 per cent to hit an all-time low of ₹317. The stock has been sliding steadily for the last six trading sessions and has lost 12.83% of its value.
Delhivery was listed on the exchanges on May 24, 2022, at ₹495.2, against the issue price of ₹487. The IPO was the second biggest this year after LIC and has been among the top five since 2021.
After being listed in a month the stock fell below its issue price, but it quickly recovered and reached a record high of ₹708.45 in a month to June. However, the stock failed to maintain its bull run and fell below its issue price for the second time on October 20. It has since fallen 31.2% from its issue price of ₹487.
Despite the stock hitting fresh lows, domestic brokerage firm ICICI Securities has upgraded the stock from "sell" to "buy" with a target price of ₹460 per share.
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Similarly, shares of One97 Communications, Paytm's parent firm, have slipped 29% after the company lock-in period ends on November 15 for the Pre-IPO investors who had invested in the company before it went public on the stock exchanges in November of last year.
On November 17, Paytm's stock plunged 10.25 percent after SVF India Holdings (Cayman), an Indian subsidiary of Japan's investment fund SoftBank, sold a 4.5 per cent stake in the company through block deals for ₹1,631 crore.
SoftBank is the second-largest shareholder with a 17.45 per cent stake in the company. Post the latest transaction, SoftBank's shareholding has declined to 12.95 per cent, PTI reported, quoting exchange data.
Warren Buffett's $300 million investment in Paytm made people confident about Paytm's impending success. Little did anyone know that Buffett’s first and only investment in India would turn sour.
Almost every investor who was anticipating huge gains from Paytm has incurred heavy losses from the very first day of Paytm's listing on the stock market.
Paytm made an initial public offering (IPO) of ₹18,300 crore in November 2021. It got listed on the exchanges at a 9 per cent discount to its offer price of ₹2,150, and the stock touched the lower circuit on its market debut day.
Since its listing, the stock has been falling, and it has never traded above its IPO price to date. At the current market price of ₹452.40, the stock is available at a discount of 79% from its issue price, bringing the Vijay Shekhar Sharma-led company's market capitalization below ₹30,000 crore.
The stock dropped to an all-time low of ₹438.35 on Wednesday. It has lost 17.29% of its value so far this week.
PB Fintech, the parent company of Policy Bazaar and Paisa Bazaar, was another stock that came under selling pressure after its Pre-IPO investor lock-in ended.
On November 11, Tiger Global Management and Internet Fund III Pte. sold a 3.5% stake in the company for nearly ₹606 crore. For the September-ending quarter, Tiger Global, through its fund Tiger Global, Eight Holdings owned 4.23 per cent and Internet Fund III held a 2.87 per cent stake in the company, according to PTI report, citing exchange data.
The insurance and financial aggregator made a decent debut on the exchanges. The scrip was listed at a premium of 17.35 per cent at ₹1,150 on the exchanges as against the issue price of ₹980. The stock rose even further, reaching an all-time high of ₹1,470.95 just two days after it was listed. However, the stock has nearly registered new lows every month since then, falling 59.18 per cent to date from its IPO price.
On the other hand, shares of FSN E-Commerce Ventures (Nykaa) sheds 6% to ₹175.20 on Tuesday, November 22, after Lighthouse India Fund III sold 1.84 crore shares of Nykaa worth ₹336 crore. Before this, Lighthouse India Fund III Limited sold 3 Crore shares worth a total of ₹252.4 Crore last week in a bulk deal, as per media reports.
Pre-IPO investors have been selling their shares in the company ever since the company's bonus shares started trading on exchanges.
Among other investors, private equity firm TPG Growth sold 5.42 crore shares of Nykaa for nearly ₹1,000 crore on November 18.
Adding to the challenges, Nykaa CEO Arvind Agarwal resigned from the company, Nykaa said in a regulatory filing.
The stock has lost over 51percent of its value in 2022 year-to-date (YTD) and has tanked 54.34 percent in the last one year. The stock has corrected by almost 7.84% in the last week alone.
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