India’s Paytm Denies Ant Group Having A Significant Influence Over It

 

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.

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.

Sandip Ginodia , CEO

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