Tag: Ant Group

Paytm signs up over 100 institutional investors for IPO

Banking & Finance

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Ant Group-backed fintech firm Paytm said it has allocated shares worth ₹82.35 billion ($1.11 billion) to more than 100 institutional investors,including the government of Singapore, ahead of what is expected to be India’s largest stock market listing.

Paytm’s offer of up to ₹183 billion, which was increased last month from ₹166 billion, garnered interest from 122 institutional investors who bought more than 38.3 million shares for ₹2,150 apiece, according to a regulatory document dated November 3.

BlackRock Global Funds, Canada Pension Plan Investment Board and Abu Dhabi Investment Authority were among the investors.

Launched a decade ago as a platform for mobile recharging, Paytm grew quickly after ride-hailing firm Uber listed it as a quick payment option. Its use swelled further in 2016 when a ban on high-value currency bank notes in India boosted digital payments.

Also read: We have priced the IPO rationally, says Paytm chief

Paytm has since branched out into services including insurance and gold sales, movie and flight ticketing, and bank deposits and remittances.

The company’s offering will open on Monday and top investor Ant Financial, with a 27.9% stake in Paytm, plans to sell shares worth ₹47.04 billion.

Several companies including Paytm have tapped capital markets this year in a fund-raising frenzy on the back of record highs hit by the Indian stock market, which has outperformed Asian peers so far this year.

In India, 157 companies including TPG-backed Nykaa, Oyo Hotels and Rooms and online insurance aggregator Policybazaar have raised $17.22 billion via IPOs this year as of October 31,compared with $8.54 billion raised by 49 companies in the same period last year, according to Refinitiv data.

Paytm’s IPO is likely to be the biggest in the country’s corporate history, breaking a record held by Coal India Ltd, which raised ₹150 billion more than a decade earlier

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China’s Ant Group shares credit data with central bank, BFSI News, ET BFSI

Banking & Finance

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China’s central bank will soon have access to private credit information of hundreds of millions of users of Ant Group‘s online credit service, in a move signaling more regulatory oversight of the financial technology sector.

Huabei, Ant Group’s credit service, said in a statement that consumer credit data it has collected will be included in the People’s Bank of China’s financial credit information database.

“The inclusion of Huabei’s credit information into the credit reporting system will help users’ credit information be more comprehensive,” Huabei’s statement read.

Consumers who do not authorize the sharing of credit data with the central bank will not be able to use Huabei’s service.

The move is part of various stricter regulations for Ant, which has been ordered to end its monopoly on information and behave more like a bank.

Ant Group, the financial affiliate of e-commerce giant Alibaba, operates many digital payments, investment and insurance services and has over a billion users worldwide. In China, about 500 million people use its online credit and consumer loans services.

Financial regulators have grown increasingly concerned at Ant’s financial services business, abruptly halting its planned $34.5 billion listing days before its stock debut.

Previously, Ant Group’s private credit-scoring system would assess a user’s creditworthiness. Those deemed trustworthy enough could use Ant’s credit and loans services including Huabei, which was popular among consumers as it gave them access to online credit in a country where it is difficult to get a credit card.

Ant Group would connect creditworthy users with banks that provided the credit, while taking a cut of the fees in the process. Banks were thus left to shoulder most of the credit risk.

Ant’s trove of customer data has long been seen as an important advantage for the company, allowing it to design financial products to suit its users.

Regulators have accused the firm of anti-competitive behavior, defying regulatory compliance requirements and engaging in regulatory arbitrage. Ant Group was ordered to hold minimum capital requirements as part of risk management measures.

According to Huabei’s statement, data such as a user’s credit lines, amount of credit used, repayment statuses and account creation dates will be shared with the central bank, while information such as individual purchases and transactions will remain private.

Huabei said it would strictly follow the regulatory requirements.

“The credit reporting system is the foundation of the country’s financial sector. As society progresses and improves, more and more users will come into contact and better understand credit reporting,” it said.



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China to target biggest payment app Alipay in tech crackdown, BFSI News, ET BFSI

Personal Finance

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Beijing: Chinese regulators have ordered sweeping changes to the country’s biggest payment app Alipay, as the ruling Communist Party attempts to rein in “the unruly growth” of the tech giants.

Alipay—with more than one billion users in China and other Asian nations including India—was told to spin off its profitable micro loan business, the Financial Times reported Monday, citing a person with knowledge of the matter.

Currently, the app allows users to pay with a traditional credit card linked to their bank or offers small unsecured loans to buy anything from toilet paper to laptops.

“The government believes big tech’s monopoly power comes from their control of data,” the source close to financial regulators told the newspaper. “It wants to end that.”

Alipay’s parent company Ant Group is China’s biggest payments services provider.

Regulators pulled the plug on the fintech conglomerate’s record $37 billion stock market launch in November after founder Jack Ma criticised officials for stifling innovation.

Ma’s business empire has been targeted in a wider crackdown on tech firms aimed at breaking monopolies and strengthening data security, which has wiped billions off companies’ valuations.

The outspoken billionaire has largely remained out of the limelight since the crackdown began.

After separating its payment and loan businesses Alipay will have to hand over customer data used to make its lending decisions to a new credit scoring joint-venture that is partly state-owned, two sources familiar with the arrangement told the Financial Times.

Alipay did not immediately respond to AFP’s questions on how the order would affect its business.

Regulators have also asked Ma’s e-commerce platform Alibaba and other internet firms to stop blocking links to rival services, Zhao Zhiguo, a spokesman for the ministry of industry and information technology, said at a briefing on Monday.

China’s market regulator last month announced rules to bring down so-called “walled gardens” built by tech companies that aim to lock users into their services.

“It is unreasonable to restrict.. access of website links, which not only affects the user experience but also damages rights and interests of users and disrupts the market order,” Zhao said.

“Users have responded strongly against this.”



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Berkshire’s Charlie Munger says China right to clip Jack Ma’s wings, BFSI News, ET BFSI

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Berkshire Hathaway Inc Vice Chairman Charlie Munger praised China‘s move to impose a sweeping restructuring on Jack Ma’s Ant Group, the fintech giant whose record $37 billion IPO was derailed by regulators in November.

The 97-year-old told CNBC in an interview alongside Berkshire CEO and billionaire investor Warren Buffett that the United States should take a leaf out of China’s book and “step in preemptively to stop speculation”.

“I don’t want the, all of the Chinese system, but I certainly would like to have the financial part of it in my own country,” he said in the interview aired on Tuesday in the United States.

Communist Party-ruled China “did the right thing” by reining in Ma, the founder of e-commerce giant Alibaba Group Holding , who has hardly been seen in public since he criticised regulators in a speech in October last year.

Chinese regulators pulled the plug on Alibaba affiliate Ant’s IPO and forced it to turn itself into a financial holding firm, a move expected to curb some of its freewheeling businesses.

Alibaba was also hit with a record $2.75 billion antitrust penalty as China tightens controls on the booming “platform economy”.

“Communists did the right thing. They just called in Jack Ma and say, “You aren’t gonna do it, sonny,” Munger said.

He also praised China’s response to the novel coronavirus. China imposed strictly enforced lockdowns and widespread curbs on movement, measures that would be less acceptable to Americans.

“They simply shut down the country for six weeks. And that turned out to be exactly the right thing to do,” Munger said.

Buffett said the pandemic had hurt smaller companies the most.

“I don’t know how many but many hundreds of thousands or millions of small businesses have been hurt in a terrible way, but most of the big, big companies have overwhelmingly done fine, unless they happen to be in cruise lines or, you know, or hotels or something,” he said.



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China’s Ant highlights distinction between NFTs and cryptocurrencies, BFSI News, ET BFSI

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Shanghai: China‘s Ant Group on Wednesday sought to draw a distinction between non-fungible tokens (NFTs) available on its platforms and cryptocurrencies currently subject to a crackdown by Beijing, after users expressed confusion.

Ant, the Jack Ma-controlled fintech group, put on sale two NFT-backed app images via its payment platform Alipay and all the items quickly sold out on Wednesday. This, when China has over the past month intensified a campaign against cryptocurrency trading and mining, part of efforts to fend off financial risks.

Ant’s adoption of non-fungible tokens caused confusion on social media where they were linked to virtual currencies such as bitcoin, which have the same underlying technology. “Alipay selling NFT products. Isn’t that illegal transaction?” one comment posted on Twitter-like Weibo said.

Ant, which is undergoing a government-ordered revamp restructuring after the collapse of its mega-IPO last year, on Wednesday said non-fungible tokens and cryptocurrencies were two different things. “NFT is not interchangeable, nor divisible, making it different by nature from cryptocurrencies such as bitcoin,” said a spokesperson at AntChain, the Ant unit that develops blockchain-based technology solutions.

He said that NFTs can be used to create a unique signature for digital assets.

Winston Ma, NYU Law School adjunct professor, also highlighted the confusion over the nature of NFTs.
“Are NFTs virtual currencies? Or, are NFTs certificates for virtual currencies? And more importantly, are NFTs securities? These are the questions that no major digital economy’s legislature has ever answered,” Ma said.

In addition to app images, NFT digital artworks are also auctioned on Ant’s Alipay platform. AntChain said in product agreements that it provides blockchain technologies to NFT products.



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Chinese banks promise to step up cryptocurrency ban, BFSI News, ET BFSI

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BEIJING: China‘s biggest banks promised Monday to refuse to help customers trade Bitcoin and other cryptocurrencies after the central bank said executives were told to step up enforcement of a government ban.

Regulators appear to worry that despite the 2013 ban on Chinese banks and other institutions handling cryptocurrencies, the state-run financial system might be indirectly exposed to risks. Beijing also worries users might evade efforts to monitor and control the financial system.

The four major state-owned commercial banks and payment service Alipay promised to step up monitoring of customers and block use of their accounts to buy or trade crypto-currencies.

“Customers are asked to be more aware of risks, safeguard bank accounts and not to use virtual currency-related transactions,” China Construction Bank Ltd. said on its website.

Similar promises were issued by Industrial and Commercial Bank of China Ltd., Bank of China Ltd., Agricultural Bank of China Ltd., Postal Savings Bank of China Ltd. and Alipay, operated by Ant Group.

Promoters of cryptocurrencies say they allow anonymity and flexibility, but Chinese regulators warn that might aid money-laundering or other crimes.

Bank executives were summoned to a meeting at which they were questioned about their activities and told to “maintain financial stability and security,” the central bank said in a statement.

It said cryptocurrency trading “disrupts normal economic and financial order” and can facilitate money laundering and other crime.

Regulators tightened prohibitions against handling cryptocurrencies in 2017 and publicly reminded banks about their potential risks in May, possibly reflecting concern cryptocurrency mining and trading was continuing.

Regulators in several Chinese regions have ordered cryptocurrency mining operations to shut down.

The Chinese central bank is developing an electronic version of the country’s yuan that could be tracked and controlled by Beijing.



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Bernstein, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Paytm is on track to break even in 12-18 months with increased financial discipline and targeted strategic investments, investment research firm Bernstein said in a pre-IPO primer.

According to reports, Paytm is aiming to raise about $3 billion in an initial public offering (IPO) late this year, which could be the country’s largest debut ever.

The startup, backed by investors including Berkshire Hathway, Softbank and Ant Group, plans to list in India in November around Diwali.

Paytm, formally called One 97 Communications, is targeting a valuation of around $25 billion to $30 billion, as per reports.

“Paytm has come a long way from a simple digital wallet business to an integrated payments ecosystem. We believe the next stage of growth will be led by financial services, particularly delivering seamless credit tech products to consumers and merchants.

“With increased financial discipline (rare in the hyper-competitive payments space), Paytm is on track to break even in 12-18 months. We expect Paytm to continue being the largest payments and fintech ecosystem in India,” Bernstein said in its report.

Paytm has realigned its payments strategy around merchant payments leadership. Paytm’s beneficiary UPI market share (a proxy for merchant receipts) is rising month-on-month and was 16 per cent in April, the report said.

“Combine that with its digital wallet, merchant acquiring and online merchant payments, Paytm has a total throughput of $52 billion in FY21, up 33 per cent year on year,” it added.

Paytm’s credit tech vertical is likely to lead the next wave of revenue growth.

“We expect Paytm’s revenue base to double by FY23 to $1 billion with non-payments revenue contributing 33 per cent,” Bernstein said.

Paytm has crossed the proof of concept stage on consumer credit tech and merchant credit tech. Early disbursal numbers have been strong, rising month-on-month with strong bank and NBFC funding partners. Broking business with Paytm Money has also got off to a strong start, the report said.



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