For several years now, Vijay Shekhar Sharma, a first-generation Indian billionaire who founded what is now the country’s most valued tech unicorn, has batted for “indigenous” ventures. From calling Facebook the “most evil company in the world” to being at the front of forming an app developers’ association to lobby against global technology giants, Sharma has never minced words in promoting nationalist and protectionist policies.

Yet, as his 12-year-old fintech firm Paytm goes public, Sharma’s clamour cannot drown out the fact that his own company is not really Indian.

The Delhi National Capital Region-headquartered fintech firm has listed the fact that it is a “foreign-owned and controlled company” as a risk in the draft offer document it filed with India’s stock market regulator the Securities and Exchange Board of India on July 16, ahead of its initial public offering, which could be India’s largest yet.

This is not the first time that Paytm’s “foreign” holding has been highlighted. Several times in the past, Sharma has been criticised for his protectionist statements even as Paytm raised multiple funding rounds from foreign investors. Paytm is backed by Japan’s Softbank, China’s Alibaba and Ant Group, and Hong Kong’s Elevation Capital (rebranded from SAIF Partners last year), who all yield power in decision-making.

Last year, before the Chinese authorities sent Ant’s IPO plans packing, the company disclosed it has “significant influence” over Paytm in its IPO prospectus.

Paytm IPO and China

In 2020, amid raging anti-China sentiment in India following border clashes between the two countries, all Chinese nationals on Paytm’s board had stepped down. Despite the shake-up, alongside Sharma, the major investors still hold relevance on Paytm’s board via three key members:

  • Munish Varma, managing partner at SoftBank Investment Advisers, is a non-executive director.
  • Ravi Chandra Adusumalli, managing partner of Elevation Capital, is a non-executive director.
  • Douglas Feagin, senior vice president of Ant Group, is an additional director.

“While we believe that our business activities have been, and continue to remain, compliant with the requirements under the Consolidated FDI Policy and other Indian foreign investment laws, we cannot assure you that the government, or a regulatory or judicial authority, will not take a different interpretation,” the company noted in its IPO documents filed with SEBI.

If it is found in violation of any such laws, Paytm warns that it may have to cease undertaking the relevant business activities and also attract regulatory sanctions, including monetary penalties. Additionally, some of its business activities or investments will need a nod from the government.

Of course, the volatility of laws, and the Narendra Modi government’s knee-jerk reactions, are a concern for all tech ventures at the start of their India journey, but especially so for foreign ones. Just in the past year, the government has banned hundreds of Chinese apps – a move Sharma had lauded, ironically – and locked horns with American apps like Signal, WhatsApp and Twitter.

While the stakes may be higher for Paytm, even homegrown internet companies are not immune to risks.

Risks to other IPOs

There is a slew of risks that Paytm has in common with other IPO-bound unicorns Mobikwik and Zomato. Stiff competition and a history of loss-making are the big ones featuring in the list of “risks relating to our business and industry”.

As India potentially heads towards the third wave of Covid-19, the pandemic was also exhaustively discussed.

This article first appeared on Quartz.