Chinese tech giant Ant Group reiterated in its initial public offering prospectus that it has “significant influence” over One97 Communications Ltd, which owns Paytm, and holds a 30.33% stake in the Noida-based venture.
“Our major associates include One97 Communications Ltd that operates Paytm, our e-wallet partner in India, in which we held a 30.33% equity interest,” Ant Group said in its filing. “Entities over which we have significant influence or joint control are classified as associates or joint ventures.”
Ant Group’s stake in the Paytm parent would be pegged at about $5 billion, based on the $16 billion valuation ascribed to its business when the startup raised $1 billion in November 2019. That round was led by US asset manager T Rowe Price along with Ant and the SoftBank Vision Fund. Ant Group was formerly Ant Financial and is part of Jack Ma’s Alibaba Group.
One of India’s leading digital payment companies, Paytm has maintained that it’s an Indian business not a Chinese one. Sino-Indian border hostilities in June led to a rise in rhetoric targeted at businesses with Chinese investments. India also banned 59 Chinese apps over national security concerns. Paytm founder and CEO Vijay Shekhar Sharma had lauded that move but was criticised on social media for having Chinese investors.
Separately, Ant also highlighted its investment position in its other portfolio bet in India, Zomato, in which it holds about 25%. In June, Zomato’s existing investor Info Edge said that the online food delivery and restaurant discovery platform was yet to receive $100 million of the $150 million it had raised from existing backer Ant Group.
This came on the back of the Indian government saying that investments from bordering countries will need approval, targeted at blocking potential takeovers from China, a measure that was announced even before the border skirmish.
Confirming that, Ant said in its filing, “Separately, in 2020, a change in foreign investment regulation in India led to our further evaluation of the timing of our additional investment in Zomato.”
Paytm and Zomato did not respond to ET’s queries.
Read: Temasek in talks to serve up to $100M on Zomato’s plate
Ant Group, Alibaba’s fintech arm, filed for a dual listing in Hong Kong and on Shanghai’s Nasdaq-style Star Market on Tuesday.
The IPO document also suggested that One97 Communications is set for another loss-making year in 2020.
The company has reported a total loss of approximately Rs 1,435 crore (1,338 million RMB) in the first six months of 2020 up to June and revenue of about Rs 1,350 crore in this period. It posted losses of Rs 3,828 crore, Rs 4,322 crore and Rs 1,708 in 2017, 2018 and 2019, respectively.
CEO Sharma has stated that One97 Communications and its affiliates are expected to turn profitable by 2022. However, increasing competition and the impending arrival of WhatsApp Pay into India’s competitive digital payment market could dent those plans.
Paytm competes with Google Pay, Walmart’s PhonePe and Amazon Pay in the digital payment segment, which includes the Unified Payments Interface (UPI), wallets and merchant commerce. Its licensed payments bank entity competes with top banks and payment gateways in the card issuance business.
The company is now actively recruiting small merchants to its platform using quick response (QR) stickers to gain a share of India’s rapidly digitising small-ticket retail payments segment. This model has been successfully used by the company’s Japanese venture, PayPay, where it has over 10 million active customers.
The company has been diversifying into new avenues of business in the financial segment such as lending, insurance and stock broking over the past year. Separately, it also competes in ecommerce, merchant management and gaming in India through various subsidiaries.
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