US funds lower valuation of Paytm, Ola due to COVID-19
United States-based mutual funds have reportedly lowered the valuation of the mobile payments app Paytm and the cab-hailing platform Ola as the coronavirus pandemic disrupted their businesses. Reportedly, the markdowns come from mutual funds holding about 1% stake in both the companies, according to The Times of India. Paytm has said that the June valuation is dated when the markets were "extremely volatile."
T Rowe Price cuts value of Paytm shares by 26%
According to TOI, T Rowe Price has cut the value of its shares in Paytm by 26% as of June 2020. The firm had invested at least $150 million in Paytm in December 2019. The shares were acquired at $254 each and are now valued at $188 by multiple funds managed by T Rowe Price, filings accessed by the publication showed.
Paytm's shares marked up in September quarter: Source
Paytm was valued at nearly $16 billion, when it last raised funding in December. In the September quarter, Paytm's shares were marked up close to their original price, a source familiar with the matter told TOI, however, they did not state an exact figure.
Paytm seeing strong momentum in business now: Spokesperson
A Paytm spokesperson told TOI the June valuation accessed by the publication is dated when the markets were "extremely volatile." The spokesperson said that Paytm is seeing "strong momentum in our business" with their Gross Merchandise Value (GMV) going up by nearly 100% in the last 18 months. Paytm's new businesses—payment gateway, UPI money transfer, equity trading, etc.—are also performing better, the spokesperson said.
'Such exercises reflect overall uncertainty caused by pandemic'
The spokesperson added, "While we cannot comment on the internal valuation exercise of our shareholders, we understand that such exercises reflect overall uncertainty caused by the pandemic and investor-specific methodologies on valuation."
Vanguards cuts value of Ola shares by 50%
Meanwhile, Ola has taken a bigger hit during the pandemic as there is a global slowdown in mobility. As of August 31, the cab-hailing platform has seen the valuation of its shares fall by nearly 50% by Vanguard. Ola's shares were being valued at $162.5 each against $311 in February. Ola was valued at roughly $6.5 billion after raising capital from Hyundai in early-2019.
'Digital payments grew popular during pandemic, but competition has increased'
Investors tracking the start-up ecosystem said that while digital payments have grown popular during the pandemic, there is also increased competition. A venture capital investor told TOI on the condition of anonymity, "Two years ago, Paytm was a monopoly in mobile payments but now there is PhonePe, Google Pay, Amazon Pay and also the recent tie-up between Reliance and WhatsApp."
China's Alibaba Group, Ant Financial are Paytm's biggest shareholders
Further, the Indian government has imposed restrictions on investments from China as the two nations are engaged in a border conflict. China's e-commerce giant Alibaba Group and fintech affiliate Ant Financial together hold up to a 40% stake in Paytm.