New Delhi: As Paytm’s initial public offering (IPO) is being touted as the biggest issue, the stock has remained in great demand in the grey market. As per the report in business publication Mint, the stock price went on to rise to Rs21,000 from Rs11,500 over a span of four days. Investors are seen willing to pay a premium on current prices even as no one is selling now.
The report quoted Manish Mittal, director, Mittal Portfolios, saying the company sold Paytm stocks to investors between Rs11,000 and Rs12,000. In its last trade in these shares two days back the price was Rs21,000, and since then no stocks were available for purchase.
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Mittal Portfolios deals in unlisted and delisted securities. According to Mittal, by some investors' estimates, the stock is attractive at Rs21,000 a piece, and they expect to rake in money during the IPO.
Why grey market’s transaction is significant?
In a grey market, shares of a company are bought and sold outside the official trading channels. Stocks available in the grey market are basically sourced from different places, including employee stock options plan. In a given situation, when employees have the stock in their demat account, they can sell it on getting a better price from another investor than what the company is offering in the buyback.
Grey market price or grey market premium indicates the the premium amount at which shares and IPO applications are bought and sold before they are available on the stock exchanges. It helps in gauging the demand for the upcoming issue.
The digital payments and financial services firm has been given in-principle approval from the company's board to raise around Rs22,000 crore through an IPO during October-December. In its upcoming issue, the company is looking at an enterprise value of over Rs2 lakh crore.
Paytm’s major shareholders include Alibaba's Ant Group (29.71%), Softbank Vision Fund (19.63%), Saif Partners (18.56%), Vijay Shekhar Sharma (14.67%).