Paytm, Snapdeal deal closer home as Alibaba bets $177M on former

Nick Sanchez
March 4, 2017

Earlier past year, Paytm - India's largest mobile payments wallet firm - hived off its e-commerce business into a separate arm called Paytm Mall, with the speculations flying high that it would lead to a prominent investor putting in funds into the new entity. The investment will give Alibaba access to Paytm merchants and logistics partners.

The fresh investment by Alibaba in Paytm Mall will reportedly take its stakeholding in the e-retailer to 36.31%, while SAIF Partners will hold 4.66% post the funding.

For Alibaba, the competition is now directly with Amazon and homegrown Flipkart.

According to the statement from the company, Paytm Mall will also launch an upgraded version of the Paytm Seller app in seven regional languages.

Indian E-Commerce contenders like SnapDeal, Flipkart etc are lagging and facing difficulties to maintain their market value.

Alibaba will find it easy to build on top of what already exists and find good opportunity in the Indian e-commerce industry, valued at $20 billion in 2020, says an analyst. Currently, Alibaba has a shareholding of 40 per cent in the unit along with its investment arm Ant Financial.

According to filings with the Registrar of Companies, Alibaba will invest Rs 1,182 crore ($177 million) in Paytm's e-commerce arm.

Recently, Paytm founder Vijay Shekhar Sharma had said, in an interview to VCCircle, that Paytm will be one of the two final winners in the Indian e-commerce contest.

Paytm was initially launched as a mobile payments business in 2010 and entered into the ecommerce segment in 2014.

According to our calculations based on the filings, this round will set Paytm E-commerce's valuation at about $573 Mn. It marks formal entry of Alibaba into the Indian market.

One97 Communications has three units-Paytm E-Commerce, Paytm Payments Bank (payments bank and mobile wallet service) and Paytm Mobile Solutions.

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