India’s tech sector faces moment of truth with Paytm IPO

Hi, this is Kenji from Tokyo. This week, we zoom in on India, where the country’s biggest IPO is expected tomorrow, by fintech unicorn Paytm (The Big Story). In particular, SoftBank’s Vision Fund is expected to benefit from the latest wave of listings in India (The Art of the Deal). On the other hand, China will tighten control over tech listings in Hong Kong, while the money raised by mainland Chinese tech companies is leading to the first annual decline in seven years ( Mercedes top 10). Singapore’s Temasek is halting investments in Chinese technology because of the crackdown (Spotlight). Finally, Francis Fukuyama ponders the difference between the Big Tech gripes in China and the West (Our Take). See you next week.

Big story

An important test for India’s tech sector came. Paytm, India’s largest fintech startup, is set for a $2.5 billion listing tomorrow, which will be the country’s largest initial public offering.

Long a promising Asian market but a second choice for investors, India has emerged as a top beneficiary of China’s relentless crackdown on companies. technology, from educational providers to delivery services. For every dollar invested in Chinese tech in the quarter ending September, $1.50 went into India, according to Asia Venture Capital Magazine. (see Smart Data for more).

Main developments: Paytm’s listing will be the biggest sign to date of whether Indian startups can replicate the success of a generation of Chinese tech conglomerates that have refreshed the market. securities of the country and provide an outlet for investors to have confidence in the local market or not. Importantly, the listing comes a year after Ant Group’s IPO in China, further demonstrating the different fortunes of the two countries’ tech industries.

Reverse shot: There are concerns that India’s vibrant tech markets have overheated as equity-buying competition increases in value and leaves companies and retail investors vulnerable to regulation. Skeptics see Ant- and SoftBank-backed Paytm – whose loss-making businesses have struggled against Google’s Flipkart and Walmart – as a test of how far investors will buy into the hype.

In addition, the threat of regulation is lurking in India. Two days before Paytm’s blockbuster list, the country’s regulator proposed stricter listing rules in an attempt to curb some of the frenzy and protect retail investors.

Mercedes’ Top 10

1. Of China internet regulator is rotate its suppression microscope about technology IPOs in Hong Kong. (FT)

2. Japanese Murata, an important supplier of iPhone components, is spend 2 billion dollars to provide better and differentiated products for smartphone manufacturers in the 5G world. (Nikkei Asia)

3. Meanwhile, the fund raised by the mainland Chinese people Tech startups through public listing are tracking first annual drop seven years. (FT)

4. Audrey Tang, Taiwan’s digital minister, think “digital democracy“Can be a model for Indo-Pacific. (Nikkei Asia)

5. Indonesia is receiving increasing attention from global electric vehicle manufacturer thanks to its nickel reserves. (Nikkei Asia)

6. Top Chinese people Chip maker Semiconductor Manufacturing International Corp is on the rise Triple production capacity although one WE black list. (Nikkei Asia)

7. Eliminates growing and inflated losses from soaring stock prices, Of India Zomato is on a agree because it creates heat for its opponents. (Nikkei Asia)

8. Singaporean game and e-commerce giant Sea expanding in Europe, India and WE, did so in Latin America. No difference Southeast Asia technology group has gone global at this level. (Nikkei Asia)

9. Great column on why the rise of wearable device and the digitization of people would “parody the word ‘doctor who knows best'”. (FT)

10. How did regulators lose control of the $2 billion crypto market and will they be able to catch it? Excellent FT movie with input from players including Binance boss “CZ”.

Take ours

At the same time, the president of the United States Joe Biden and his Chinese counterpart Xi Jinping met almost yesterday, Francis Fukuyama, a scholar known for his global bestsellers The end of history and the last man, on a Launch conference explains the difference between the pressures being exerted on Big Tech in China and the West.

“I don’t want to pretend what the Chinese are doing to [what] Europeans and Americans are doing,” Stanford University said the professor at a webinar organized by Asian Development Bank Institute. Fukuyama admits that regulators in Beijing have said to a certain extent “the right things,” such as criticizing tech companies for inadequate privacy protections, similar to what groups of the United States include Google and Facebook have faced at home and abroad.

“But the trouble is, the Chinese government has access to it all [the] as well as data and use it for political purposes,” he said. “They use it for political control purposes in a way that tech companies in Western countries are not allowed to do.”

Another source of trouble, Fukuyama added, is that no one knows “what the real intentions of the Chinese government are.” Fukuyama points out that the ostensibly policy objective may be reasonable, or even sincere, but it can also be “an exercise in demonstrating that the government has the power to prevent these companies from doing the wrong things.” that they don’t want. . . In other words, they really want this power for the sake of power and to control politics.”

Fukuyama expressed distrust of Facebook, Google and other US Big Tech companies over their data handling and the considerable powers they have gained in recent years. But the scholar was clear on his basic statement: “I would worry more about [data] in the hands of the Chinese government rather than me in the hands of a profit-making American company. “

– Kenji

Smart data

We are the first to admit that when it comes to deals, India’s tech sector is still far from China’s. There is a rather large gap between the number of transactions and their volume. But India’s growth rate looks very interesting amid the regulatory crackdown in mainland China over the past year and many global investors seem to turn to India as a safer bet. Their timing couldn’t be better – Indian startups are go public with record speed. But has the country’s tech sector overheated?

Spark

Temasek Chief Investment Strategist Rohit Sipahimalani To be pause in China. The Singapore state-owned investment firm, whose exposure to China far exceeds even in the domestic market in 2020, is concerned about Beijing’s crackdown on the tech sector and the impact on valuations.

“We will probably wait to deploy more capital until we have a bit more regulatory clarity in that area,” said Sipahimalani. “I hope in the next few months you will have regulatory clarity, and that will shape some of the winners and losers there.”

Sipahimalani, who has been doing this for almost two years, has reason to be cautious. Temasek supported Alibaba, Tencent, the financial technology giant ant group and ride-hailing company Global Didi – all companies have felt Beijing’s decision.

“Without clarity on the regulatory books, it is difficult to say – whether this is a fair value or not a fair value – so I think we should be patient and wait,” added Sipahimalani.

The Art of the Deal

SoftBank is in a vital position to take the wind from India’s first wave of start-up IPOs. Japanese corporation – that Vision Fund revealed a record quarterly loss this month as some of its publicly traded investments stalled – possibly banking on about 7 billion dollars from the public list of Paytm, PolicyBazaar, Oyo and others.

Two Tokyo-based investment group Vision Funds have invested around $11 billion in Indian startups. The resulting profits will also provide a respite for SoftBank, which is battling investor skepticism about the stock price hike.

SoftBank’s publicly traded Chinese portfolio companies include Global Didi, digital freight platform Full Truck Alliance and real estate brokers Ke, has collapsed amid repression in China. Other big bets, such as Korean e-commerce company Coupang, have also struggled.

If the IPO of Zomato, an Indian food delivery company whose shares have almost doubled since going public this year, is any guide the upcoming wave of listings could help SoftBank recover some of its losses. there.