Chinese internet major Alibaba is leading a $200-million (Rs 1,320-crore) round in the recently demerged entity of Paytm’s online commerce business.
While Alibaba.com Singapore is putting $177 million (Rs 1,168 crore) in Paytm E-commerce, multi-stage investment fund SAIF Partners is pumping in the rest of the capital, according to regulatory filings made with the Registrar of Companies.Alibaba Singapore and Alipay Singapore jointly held about 40% stake in the e-commerce business before this transaction. Now Alibaba Group’s holding in the Paytm entity is expected to comfortably be over 50%. However, the Indian company plans to create a large employee stock ownership (ESOP) pool, which will dilute Alibaba Group’s overall holding to just a little over 50%, a source aware of the development said.
Alibaba.com Singapore has picked up 4,74,155 shares, while SAIF Partners has taken 59,812 shares, according to the regulatory filings.Both Alibaba and SAIF Partners were existing investors in Paytm’s parent One97 Communications, which was recently valued at $4.8 billion when it raised $60 million from Taiwan’s Mediatek. The fresh funding for Paytm’s e-commerce platform has come at a valuation of about $1 billion, as reported by TOI , in its February 3 edition.The developments coincide with Paytm starting a new platform this week, named Paytm Mall, based on Alibaba’s successful business-to-consumer (B2C) platform, Tmall.com in China. This sets the stage for a three-way battle between Alibaba and ecommerce biggies such as Flipkart and Amazon in India.
Incidentally, Alibaba also owns about 4% in Gurgaon-based online marketplace Snapdeal, which is struggling with a cash crunch amid a tough funding environment for consumer internet firms in India.
Emails sent by TOI to Paytm and Alibaba did not elicit any response till the time of going to press.
Prior to this investment, Aibaba had an indirect presence in the Indianonline retail market through its investment in Paytm and Snapdeal. Top Alibaba officials have been coming to India expressing their intent to start operations here since last year. The Jack Ma-led company had also held talks with Flipkart however those talks were not conclusive resulting in Alibaba opting for Paytm to begin its India operations.
Paytm’s commerce marketplace has not been able to scale significantly since it began operations in 2014 . In the run up to the launch of its spun off e-commerce business, Paytm has been going through an internal restructuring moving certain executives to Paytm Mall, as reporter by TOI earlier.
Paytm had to separate its commerce and payments business to meet the Reserve Bank of India guidelines on payments bank. Paytm’s founder Vijay Shekhar Sharma holds a 51% stake in the yet-to-be launched payments bank while the rest is owned by One 97 Communications and its subsidiaries.