Is it true that many of the large institutional investors have been buying into the Paytm stock after the correction?

Paytm has shown tremendous volatility in the five day after listing but has also given opportunities. Not surprisingly, the Paytm stock has seen some tremendous value buying by some big funds in the last few days. In the first 2 days, the stock lost up to 41% from its IPO price to touch a low of Rs.1,271. However, from the lows of Monday, Paytm gained 40% over the next 3 days and even on a volatile day like Friday, it has held on.

One can argue that Paytm is still 18-19% below its IPO price, but that is off the point. What matters is that there is a certain reassurance emanating from the fact that the stock has taken support and bounced back. And for that the credit goes to the big players like Blackrock and CPPIB, which were also the anchor investors. Funds have not confirmed these purchase details but it is reported that Blackrock and the CPPIB were heavy buyers.

It must be remembered that both were anchor investors in the issue and used the lower levels to average their cost of holdings. This would help them seek an exit when the 1 month anchor lock in expires. Both are formidable investors. Blackrock is the largest asset manager in the world with AUM of $9.6 trillion, while CPPIB with AUM of $550 billion is one of the most active and prominent long-only buyers in the Indian markets.

Why is this buying so important for Paytm? The fact that two influential anchor investors with formidable AUM sizes are buying Paytm at lower levels, adds to confidence in the stock. It is one thing for the CEO to say they are in the business for a long haul. When anchor investors get in and buy at a lower price, it gives a lot of confidence.