Chinese Investors Leaving Paytm Due To Diplomatic Tensions? Paytm Responds..

Chinese Investors Leaving Paytm Due To Diplomatic Tensions? Paytm Responds..
Chinese Investors Leaving Paytm Due To Diplomatic Tensions? Paytm Responds..

The Chinese fintech giant, Ant Group is looking to sell its 30% stake in Indian digital payment processor Paytm, as per the reports.

The said reason behind this consideration is the tensions between the two neighbours along with a toughening competitive landscape, according to sources.

So far, the financial details of the possible transaction is yet not confirmed.

As sources said that the Alibaba-backed payments-to-consumer credit behemoth, Ant  has not launched a formal sale process yet.

What Does Paytm Say?

Interestingly, both the companies have denied to comment on any development.

According to a Paytm tweet, “Sad to see a responsible organisation publish an untrue headline & article, when both @antgroup and us have officially denied it,”.

Around a year ago, Paytm was valued at about $16 billion during its latest private fundraising. 

Considering that valuation, Ant’s stake in the Indian firm valued around $4.8 billion.

According to both Ant and Paytm,  the stake sale information was incorrect. 

“There has been no discussion with any of our major shareholders ever, nor any plans, about selling their stake,” said Paytm spokesman.

Why Would This Happen?

If Ant’s exits from Paytm then it would mark another reversal for the Chinese company. 

As it is nearing its dramatic suspension of a $37 billion stock listing last month, which would have been the world’s largest.

This move would also be a step back from its ambitions of becoming a global payments leader. 

Prior to this, Ant also found cutting its financial support to many of the overseas affiliated e-wallet firms according to the sources.

The main trigger behind the divestment of its stake in Paytm is the worsening diplomatic relations between India and China in the past few months, says sources.

The clashes resulted in India’s tightening rules for investments from China.

The country has also banned dozens of Chinese mobile apps, including from tech giants Tencent, Alibaba and ByteDance.

In addition to that, it banned 43 more apps late last month.

So far, Alibaba has invested over $4 billion in India and plans to invest around $5 billion in 2021.

But now, it has been put on hold, according to the sources.

Tough Competition

Apart from the tighter policies, tougher competition is another factor behind Ant’s calculations regarding Paytm as it is losing its dominance.

Currently, online transactions, lending and e-wallet services have been growing rapidly in India.

On top of that, central is also pushing to make the country’s cash-loving merchants and consumers adopt digital payments.

This has carved the path for entry and expansion for many new players such as  Facebook-owned WhatsApp, Alphabet Inc’s Google Pay, Walmart’s PhonePe and some domestic players.

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