Why Indians should worry about the Ant Group IPO

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It will possibly be the biggest IPO of our times. Ant Group, an affiliate company of the Chinese Alibaba Group, is preparing for an IPO that will see it being valued between USD 200 – 300 Billion. The company recently published a 674-page IPO prospectus which has details about the IPO that will see big banks like Citigroup, JPMorgan and Morgan Stanley rake in hundreds of millions of dollars only in fees.

Earlier CNN had reported that the IPO could very well see Jack Ma pull off a record-breaking IPO for the second time. The Indian connection here is the amount of influence a Chinese company like Alibaba has in the local market. Jack Ma for one is seen as a rock star by entrepreneurs big and small due to his global success and rags to riches story. Beyond the details of the IPO, the Prospectus document has some startling details about the plans that Ant Group has for its Indian investments which include Zomato and Paytm.

The Chinese side of Paytm

The IPO Prospectus clearly states that Ant Group has a 30.33% equity interest in Paytm and hence has significant influence or joint control of One97 Communications Limited that operates Paytm. This part is particularly alarming considering the scale of Paytm in terms of its user base and its critical nature as an e-commerce payment system and financial technology company. 


“A Chinese company owning one-third of India’s largest fin-tech company is a national security threat on any given day.”


Vijay Shekhar Sharma, Paytm’s CEO has made no secret of his admiration for Jack Ma and Alibaba, a company that has always had deep ties with the Chinese Communist Party. As early as 2015, Paytm had entered into an agreement with Alibaba and Ant Financial to develop their mobile commerce and payment ecosystem. A Chinese company owning one-third of India’s largest fin-tech company is a national security threat on any given day. In Paytm’s case, even if the data is being kept in Indian servers, it can still share it with its Chinese investors because they are not an outsider or third party by definition. 

The Alibaba ecosystem offers technology to companies for anything and everything including retail, digital marketing, work-flow management, financial technology, logistics, cloud computing and more. This ‘ecosystem’ is something Alibaba has offered to most of its investee companies including Zomato.  

The not so sweet a deal for Zomato

The IPO Prospectus mentions Zomato as a company they have invested in and are ‘currently facing challenges because of a change in foreign investment regulation in India.’ It reads: ‘a change in foreign investment regulation in India led to our further evaluation of the timing of our additional investment in Zomato…’ The section also defines how the Ant Group might face ‘challenges in expanding cross-border payment business due to lack of acceptance of our product and service offerings.’ This could very well be due to the Boycott China movement gathering steam in India and in many other countries around the world.

In an apparent reference to India, it has also mentioned risks like ‘geopolitical frictions that can impede our ability to develop our business in new jurisdictions’. The IPO also indirectly indicated that the various policy changes introduced by the government related to data localisation, privacy and FDI have hit home. It begins with a statement about ’difficulties and costs associated with hosting data locally pursuant to data protection regulations as well as compliance with data security and privacy laws in a particular jurisdiction’ and then mentions the ‘challenges in replicating or adapting our company policies and procedures to operating environments different from that of China, including those relating to technology infrastructure.’

Our thoughts

The new FDI rules set out by the government will surely make it a lot harder for Chinese companies to invest in Indian entities. The simmering anti-China sentiment and the national-level push for Aatmanirbhar Bharat will also not help their case. As well- informed consumers, we should always be mindful of companies that are truly Indian and companies that merely pretend to be Indian. To paraphrase the words of Harsh Goenka, the less we depend on China, the faster we can build a China-mukt Bharat.

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