Paytm founder Vijay Shekhar Sharma. Photo credit: Wikipedia.
Jack Ma’s Alibaba continued its quiet global expansion today, leading a US$200 million funding round in India’s Paytm Ecommerce to give it control over the newly launched Paytm Mall site and app.
Paytm’s parent company One97 Communications recently split Paytm into two entities – Paytm E-commerce Pvt. Ltd. and Paytm Payments Bank. Paytm founder Vijay Shekhar Sharma diluted his stake in One97 to invest US$48 million in Paytm Payments Bank for a controlling stake in it.
The fresh Alibaba investment in Paytm Ecommerce is confirmed by a regulatory filing in India, reported by The Times of India.
Paytm has not issued a statement regarding the funding, but according to documents submitted to the registrar of companies accessed by Tech in Asia, the Alibaba Group – which includes its affiliate Ant Financial – will put US$177 million into Paytm. The remaining US$23 million will come from SAIF Partners.
It comes nearly a year after Alibaba took a controlling stake in Lazada, an online marketplace for Southeast Asia.
Fast-growing ecommerce market
The funding is for Paytm’s ecommerce business, which the startup decided to split from its payments unit last year. It puts Alibaba closer to a formal entry into India’s burgeoning ecommerce market to combat market leaders Flipkart and Amazon.
The new share issuance will be completed in the next six months. The ecommerce giant already holds about 40 percent of Paytm Ecommerce alongside Jack Ma’s Ant Financial, China’s top mobile payments company, after two earlier investments.
As an overall entity – the payments and ecommerce units combined – Paytm was valued at US$4.8 billion when it raised US$60 million in August last year.
Alibaba’s investment in Paytm can pose trouble for the existing players, especially homegrown duo Flipkart and Snapdeal. Both have been struggling to raise funds, with Flipkart’s valuation cut several times, and Snapdeal recently announced a 100 percent pay cut for its founders. The big pockets of larger rival Amazon has led the Indian ecommerce startups to fall back in the race to top position.
With Alibaba committing to India with more funds, it could be a straight war between Amazon and the Chinese company.
Paytm, which started out doing payments, has started to push its ecommerce business. This week, the startup launched Paytm Mall, which is similar to Alibaba’s Tmall in China. The platform has 140,000 sellers with over 68 million products in electronics, consumer durables, home furnishings, and fashion.
The article has been updated to clarify that the investment is in Paytm Ecommerce.
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