Ant Group gradually divests from India

Written by Kapronasia || December 05 2023

Ant Group has an ambitious international expansion strategy with Asia Pacific at its core. However, one of the largest markets in the region is increasingly not part of Ant’s vision. Suffice to say that when Ant was ramping up expansion in Asia a few years ago, it did not foresee geopolitical tensions with India impacting its investments in the subcontinent, a market the Chinese tech giant once saw as very promising. But the business environment for Chinese companies in India is likely to remain highly challenging for the foreseeable future. 

Before we dive into Ant’s various India-related divestitures, is important to note that the Chinese fintech giant has not had a great decade so far – certainly not compared to the high-flying 2010s – and given the hit its bottom line has taken from all the restructuring, there are sound financial reasons to unload investments it no longer deems essential to its international growth. 

With that in mind, Ant completed its sell-off of its stake in Indian food-delivery firm Zomato last week for roughly US$400 million, following earlier sales of Zomato shares in August and November 2022. The timing is good: Zomato shares have surged more than 90% this year, after falling by more than half in 2022 when tech stocks struggled around the world. The block deals are set to be executed at 111.28 rupees per share, a 2.2% discount to Zomato's close on Tuesday, the term sheet said.

In August, Ant traded about half its equity stake of 10.3% in Paytm valued at US$628 million for convertible debt. The stake was transferred from Ant’s Netherlands company Antfin to a Netherlands group owned by Paytm’s founder and chief executive Vijay Shekhar Sharma. His holding in Paytm rose to 19.4% , while Ant’s fell to 13.5%. This arrangement allowed Ant to retain economic value of its 10.3% stake while reducing the Chinese company’s size as a shareholder.

It is likely that Paytm saw this transaction as a strategic move to assuage regulatory concern about significant Chinese ownership of India’s most valuable fintech firm. Paytm likely wants to do everything it can to stay in the good graces of regulators given its desire for a small finance bank license, and probably other licenses in the future. 

While India remains one of the most exciting markets for fintech in Asia Pacific, exiting the subcontinent will not be a dealbreaker for Ant’s global expansion because the Chinese company has a strong presence in most key Asian markets. Ant says that outside of China, Alipay+ covers 5 million merchants in 56 markets, and works with over 20 mobile payment partners across Asia which together serve over 1.4 billion consumer accounts.