Is overseas layout another way out for Alipay after China's tech crackdown?

Nov 16, 2021 Finance


It is reported that Ant-backed Indian payment platform Paytm has made another new development in its IPO.

Data shows that it priced its IPO shares at 2,150 rupees (about $28.9), which is the upper limit of the previously announced price range of 2,080-2,150 rupees per share. That is to say, the IPO fundraising scale will reach 183 billion rupees (about $2.45 billion), and will exceed the listing of India's state-owned coal company Coal India of 150 billion rupees in 2010, becoming the country's largest-ever IPO.

Paytm's shares are expected to be officially traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) around Nov. 18, according to related institutions.

Public information shows that Paytm's parent company is One97 Communication. According to the shareholding structure, Paytm founder Vijay Shekhar Sharma holds 14.61% of the parent company, Ant Group holds 30.33%, SoftBank Group holds 18.73% and Alibaba holds 7.32%.

It is not difficult to see that Ant Group is the largest single major shareholder before Paytm's IPO, and along with its IPO, Ant will also be the biggest winner of this IPO.

Ant Group is about to harvest India's largest IPO

Paytm was launched in 2009 as a mobile-first digital payments platform to enable cashless payments. It began with assisting bill payments and mobile top-ups and then set up the "Paytm Wallet" in 2014. Subsequently, it has ventured into financial services such as mobile banking, lending, insurance, and wealth management services.

In 2015, Ant Group started its overseas expedition, and the first step was India, which has a large population and a blue ocean market.

Between 2015 and 2019, Ant Group invested in Paytm three times: In March 2015, it has made a strategic investment in One97 Communications, the parent company of Paytm; in September of the same year, it made the second round of investment in Paytm together with Alibaba and became the company's largest shareholder; at the end of 2019, Ant Group led a $1 billion Series E round of financing in Paytm together with SoftBank, and its shareholding continued to lead.

In addition to financial support, Ant also continued to help Paytm make another "Alipay" in terms of technology and business model in India. Ant has not only sent engineers to India to help Paytm solve problems in application architecture, scalability, and stability but also helped Paytm expand from the initial single payment scenario to other scenarios such as taxi, movie, and air ticket, as well as pan-financial businesses (wealth management, insurance, credit, and stock brokerage).

Paytm founder Vijay Shekhar Sharma once said, "Paytm is building India's most dominant mobile payment and commerce ecosystem. With the Alibaba and Ant Financial partnerships, we look to bring half a billion Indians to use the Paytm mobile platform by 2020".

In this way, with the support of Ant Group, Paytm has grown to the first in India and the third-largest e-wallet in the world.

According to the prospectus disclosure, in the fiscal year 2021, Paytm has achieved a gross merchandise value (GMV) of Rs. 4,033 billion (about RMB 347.24 billion); the overall payment transaction volume occupies about 40% share of the Indian market, and wallet payment occupies 65% to 70% market share.

In terms of user numbers, Paytm had only 25 million users before Ant Group's investment in 2015, after which it surged to 250 million in 2018, and by the end of March 2021, Paytm had about 333 million individual users and over 21.1 million merchant users.

Is overseas layout another way out for Alipay after tech crackdown

Paytm's IPO is not the only recent harvest case of Ant's overseas payment layout.

Earlier this month, South Korea's largest mobile payment platform Kakao Pay was listed on the Seoul Stock Exchange in South Korea ahead of others. Ant is its second-largest shareholder, holding 39.1% of the shares, and the majority shareholder is its parent company Kakao, holding 47.8% of the shares.

Kakao Pay was launched in 2014 and built into Kakao Talk, a Jk instant messaging service that has more than 50 million users and is one of the most popular social apps in South Korea. In addition to financial payments, the group's business includes instant messaging, games, cultural content, mobile travel, and many other areas.

According to the prospectus, as of July 2021, Kakao Pay has 36.6 million users, and the population is 51.67 million in Korea, which means that as many as 70% of Koreans are using the platform.

It is worth mentioning that Kakao Pay was originally scheduled to go public in August, but the company's IPO had suffered two delays due to increased regulation of fintech companies in South Korea. The Korea Economic News has commented that South Korea's anti-monopoly drive-in payments are "following in the footsteps of China."

In addition to Kakao Pay, which has already monetized, and Paytm, which will soon monetize, Ant Group has a large number of seed players waiting to monetize.

Since 2015, Ant Group has been laying out overseas payments, relying on the method of "equity investment + technology export", and has "acquired shares to support" a large number of overseas local payment platforms.

Since 2016, Ant Group has done enough work in the overseas layout: Ant Group and Ascend Money, a Thai payment company, has started strategic cooperation to build a Thai version of the wallet TrueMoney; it invested in Kakao Pay, a mobile financial subsidiary of Kakao in South Korea, and Mynt, a digital financial company under Globe in the Philippines; it also launched DANA, a digital wallet in cooperation with a local Indonesian company; it also launched an independent e-wallet app AlipayHK for Hong Kong users; it established a joint venture with Malaysia's CIMB; it launched Easypaisa, a mobile wallet in Pakistan; it also launched a local version of Alipay with a Bangladeshi company.

In fact, unlike Europe and the United States, which are accustomed to credit card payments, Southeast Asia has a population of more than 650 million and a large number of Chinese, which will accept Internet payment methods more quickly. They are also expected to speed up the pace of listing. That means that in today's environment of stagnant traffic and strict regulation, this group of foreign payment companies may become the Ant Group's "new wallet" in the next few years.

This is an article from WeChat official accounts Leifengwang (ID:leiphone-sz), written by Yu Fei.