China’s Ant has no influence on operations, says Indian unicorn Paytm

Vijay Shekhar Sharma at the Asia PE-VC Summit 2018 organised by DEALSTREETASIA

With anti-China rhetoric gaining momentum in India, Paytm parent One97 Communications Ltd has come under fire after its single-largest shareholder ANT Financial said it has ‘significant influence’ over the company.

The Hangzhou, China-headquartered financial institution, ANT Financial, which is gearing up for an initial public offering, had made the declaration in its draft prospectus in August.

Responding to the criticism, Paytm’s founder Vijay Shekhar Sharma said: “It is illogical to call Paytm a Chinese company, when all our products and licences are governed by Indian regulators. Unlike other payment service providers, our payment operation is completely housed under Paytm Payments Bank (PPBL) […] On the topic of significant influence, by accounting standards, any company with more than 20% stake in an establishment is considered to have a tag of ‘significant influence’.”

Paytm has successfully raised money from international investors, and counts Softbank, SAIF Partners, Berkshire Hathaway, T Rowe Price and Discovery Capital as major investors and shareholders.

Graphic: Mint

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Graphic: Mint

Madhur Deora , One97’s president and chief financial officer said ANT Financial, which owns around 30% stake in the company, enjoys the same rights and powers in the group. “All shareholder rights are the same for our investors, with ANT Financial having no influence on our daily operations. Our business decisions are taken by our senior management teams to drive financial inclusion in the country. Paytm, as a brand, is controlled and governed by all Indian laws and follows all regulations set by government agencies. Paytm has been, and will always remain Indian.”

“We do not have executives from our shareholders or any other company working on our products, nor does anyone have access to customer information, which is regulated, audited and stored safely in India. Foreign investments do not affect our mission on how we operate the company. We have blue-chip investors from around the world,” he added.

Deora said a large part of Paytm’s ambition is to drive financial services which are regulated by the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (Irdai) and the Securities and Exchange Board of India (Sebi). Noida-based Paytm houses Paytm Payments Bank Ltd, Paytm Insurance and Paytm Money, its wealth management arm.

In order to fully comply with the Indian laws, Paytm has also hived off its financial services subsidiaries and restructured ownership patterns in line with domicile ownership norms. For instance, Paytm’s Sharma own a 51% stake in Paytm Payments Bank, which reported annual revenue of 2,100 crore in 2019-20. The rest is owned by One97, as per public documents.

In July, Mint had reported that Paytm along with Sharma will acquire Mumbai-based private sector general insurer Raheja QBE for 568 crore to fast-track its foray into the insurance space. The strategic acquisition was done through QorQl Pvt. Ltd, a technology firm where Sharma holds a majority share, while rest is held by OCL, the company had said.

“Our regulators, such as RBI, Irdai and Sebi, are highly sophisticated. In certain sectors, there is a requirement for majority Indian shareholding which allows critical sectors to be governed in prescribed ways. Vijay Shekhar Sharma feels privileged to be the promoter of a financial services company,” said Deora.

On the new foreign-direct investment rules, Sharma said that the last $1 billion round raised by the company is most likely its last equity fund-raise, before it starts the process of going public. The Centre had made changes to the FDI norms in April, making it necessary to get prior approval for investments from countries it shares land borders with, including China.

This article was first published on livemint.com

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Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.