China-based Alibaba Group has put on hold plans to invest in Indian companies, two sources aware of the plans told journalists, amid souring business relations and rising political tension between the rival states after a clash in their Himalayan border.
Alibaba, which has fuelled the development of several Indian start-ups, will not put in new funds to expand its investments in the country for at least six months, the sources said.
But, there are no plans to reduce its bets or depart investments, they added. The sources declined to be identified as the talks are private.
Alibaba did not respond to a request for comment.
The Chinese conglomerate and its affiliates Alibaba Capital Partners and Ant Group have spent more than $2 billion in Indian businesses since 2015 and participated in funding rounds of another $1.8 billion, according to data in PitchBook, which tracks private market financing.
Hitting the brakes could slow fundraising plans for some of Alibaba’s investee companies in India, including payments platform Paytm, restaurant aggregator and food delivery service Zomato, and e-grocer BigBasket.
“Further evaluation of timing”
In its IPO filing, Ant said a change in foreign investment principles in India had contributed to a “further evaluation of the timing” of its extra investment in Zomato.
Ant also said it counted Paytm owner One97 Communications, in which it has a 30% stake, as an associate or joint venture partner over which it has “significant influence”.
India, in April, place investments from China and other bordering countries under greater scrutiny to prevent opportunistic takeovers amid the coronavirus pandemic.
But a border clash in June, where 20 Indian soldiers were killed, escalated tensions, and India imposed stricter curbs on Chinese products and companies amid calls for boycotts.
“Alibaba and a few others have put on hold their India investment plans for six months and they are hoping that things would cool off a bit after that,” stated one of the sources.
Indian start-ups are heavily funded by Chinese investors like Alibaba and Tencent. Bankers have previously said they were trying to bolster their presence in the nation with an aim to cultivate their earnings outside China.
There is a lot of interest from European and US-based investors to fill the gap left by the Chinese, said Arjun Sinha, partner at Indian law firm, AP & Partners.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Aditi Shah in New Delhi and Sumeet Chatterjee in Hong Kong. Additional reporting by Kane Wu in Hong Kong and Josh Horwitz in Shanghai. Editing by Euan Rocha and Mark Potter.
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