InvestorQ : Is it true that Ant Financial of China is selling out of Paytm?
NISHA Nayak made post

Is it true that Ant Financial of China is selling out of Paytm?

Priyanka N answered.
2 years ago

Ant Group, the Fintech wing of Alibaba Group, may look to sell its 30% stake in Paytm, in the midst of rising tensions between India and China over the ongoing border issues. While Alibaba is yet to launch the sale process, it is expected to happen sooner, rather than later.

Two of the largest backers of Paytm include Ant Financial of China and Softbank of Japan. Considering the current indicative value of Paytm at $16 billion, the 30% stake of Ant Financial would work out to around $4.8 billion at current valuations.

While both Ant Financial and Paytm have denied the authenticity of the news, many Chinese companies are looking to exit their India investments to avoid any blockage in the future. Chinese investors have earned phenomenally in Indian digital plays and may also be looking to cash out at current levels.

Ant may also be looking to monetize some of its holdings after its recent mega IPO in the global market failed to take off. Clearly, there was no appetite from global investors for an IPO of that size. Interestingly, Ant Financial has been cutting its support to many of the payment and e-wallet companies as they expect this space to get crowded.

India has already tightened rules for investments from China. In addition, the Indian government has also banned over 100 Chinese mobile apps on security grounds. Ant is of the view that they would not be able to raise their stake in Paytm in the current juncture and that may have likely driven the decision.

Many of the Indian start-ups are heavily funded by Chinese investors like Alibaba and Tencent. Interestingly, Alibaba has already invested $4 billion in India so far and it had plans to invest another $5 billion in 2021. That would be on hold for now.

Ant is also worried by the rising competition in this space as Paytm is grappling with competition from Google Pay, WhatsApp Pay and Wal-Mart’s Phone Pe. It remains to be seen which foreign investor comes in and fills up the gap, although the demand is expected to be buoyant.