Paytm IPO to give Chinese investors bumper exits

BENGALURU:  Paytm’s upcoming IPO, touted as the country’s largest public issue till date at $3 billion (Rs 21,000 crore), may also make it a truly 'Aatmanirbhar' firm.

Two of its Chinese investors, Ali Baba and Ant Financial, are likely to exit or dilute their stakes during the listing, sources privy to the development said. Ant Financial and Ali Baba together hold 37% in Paytm, with other major stakeholders being Soft Bank at 20% and SAIF Partners at 19%.

Vijay Shekhar Sharma-led Paytm had been caught in the crossfire over the nearly 40 per cent stake held by the Chinese companies when Indo-China tensions peaked last year. Sharma has, of late, advocated for developing indigenous technology, while leading a start-up alliance against big tech firms such as Google and Apple over an increase in their in-app payment charges for developers.

Google, for its part, had temporarily suspended Paytm and its fantasy games app from its platform after it was found violating company policies. Sharma had likened big tech to the East India companies, claiming that they were monopolizing markets. He had also announced the launch of India’s first mini app store.

Meanwhile, Alibaba’s payment subsidiary, Ant Financial, has put its investments into Indian firms on hold and is seeking an exit from firms including Paytm and Zomato.  Paytm’s IPO is also being described as a watershed moment for the markets, testing the appetite for new-age tech companies. But since Indian market regulator SEBI has proposed new dual listing norms, sources say Paytm may also consider listing in the US markets.

Serial entrepreneur K Ganesh noted that start-up IPOs were a welcome development. “We need more tech companies in Indian markets, currently dominated by retail and banking firms, which are highly overvalued compared to their global peers,” he said. “Tech companies look inefficient in the short term, especially due to the cash burn and higher valuations, but in a country like India, they will make more profits in the long term,” Ganesh added.