Vijay Shekhar Sharma regrets not choosing right bankers for IPO

Paytm founder on IPO : At Tie Delhi NCR's India Internet Day 2024, Paytm founder Vijay Shekhar Sharma expressed his regret over the selection of bankers for the company’s initial public offering ( IPO ) in November 2021. "I have been an entrepreneur long enough now. My biggest regret is not choosing the correct bankers for the IPO," Sharma stated.

Using a metaphor to describe his experience, Sharma said, "To enter the temple of God, you need the right priest... perhaps we didn’t choose the right one." 

Sharma’s advice to other entrepreneurs was clear: "Choose the right banker."

His comments come as Paytm’s share price has dropped by 9 per cent following show-cause notices issued by the Securities and Exchange Board of India ( SEBI ) to Sharma and other board members. 

The notices allege misrepresentation of facts during the IPO process and non-compliance with shareholder classification norms. This probe, initiated with inputs from the Reserve Bank of India ( RBI ), is centred around Sharma’s classification as a promoter, given his management control during the IPO filing.

Since its listing, Paytm's shares have fallen by nearly 60 per cent from their issue price of Rs 2,150, debuting on the market at Rs 1,560.80. This decline stands out in a booming market where many IPOs have seen overwhelming demand.

"Nowadays, even small IPOs get so big," Sharma remarked, alluding to the success of other companies’ stock market debuts this year.

Sharma recalled the challenges in securing funding during Paytm's early years. "I didn’t get venture capital luck until seven years after starting the company. My Series A funding came in 2007, but I founded the company in 2001. I had to bootstrap and focus on cash generation. In that rush, I learned one thing: there’s no such thing as profit and loss; the real truth is cash—everything else is trash."

The Paytm IPO was managed by several major banks, including ICICI Bank , JPMorgan, Goldman Sachs, Morgan Stanley, HDFC Bank , Citi, and Axis Capital, but the company's shares struggled after listing.