Alibaba the eCommerce company in China is setting its sights on India raising its stake from 40% to 62% in Paytm E-Commerce Pvt. The Indian ecommerce arm of the payment company
Paytm E-Commerce Pvt. Ltd, the online marketplace arm of One97 Communications Ltd, is raising $200 million (Rs 1,334 crore) in a funding round led by Alibaba Singapore E-Commerce Pvt. Ltd, a wholly-owned subsidiary of Chinese internet giant Alibaba Group Holding Ltd, ET reported on Friday.
Alibaba will invest $177 million (Rs 1,180 crore) while the rest will come from venture capital firm SAIF Partners, an early investor in One97, said a report in The Economic Times citing filings with the Registrar of Companies.
Following the deal, the stake of Alibaba and its affiliate Ant Financial in Paytm E-Commerce will increase from the current 40% to 62%. “But this will come down as the company creates a large employee stock option pool (Esop) to attract and retain talent,” ET quoted a person privy to the development as saying.
Alibaba preparing to take on global rival Amazon and local market leader Flipkart.
Paytm E-commerce was demerged from parent One97 Communications whose focus is on digital payments business.
Alibaba holds about 3% in Snapdeal through its mobile web browser UCWeb in India.
The deal is expected to value Paytm E-Commerce at close to $1 billion, the report added. In December, the company announced it was merging its wallet business with the payments bank to comply with the Reserve Bank of India’s directions.
The funding round will mark Alibaba’s formal entry into India’s crowded e-commerce market. The deal is expected to shake up the country’s e-commerce sector, which is already witnessing a cut-throat rivalry between Amazon, Flipkart and Snapdeal. Interestingly, Alibaba also owns a tad over 3% in Paytm’s rival Snapdeal.
Earlier this week, Paytm launched a separate app and website for its online marketplace business, Paytm Mall, which is similar to Alibaba’s Tmall in china. The platform has 140000 sellers with over 68 million products in fashion, electronics and home furnishing. Paytm E-commerce is also likely to become the vehicle for consolidation going forward in the online retail space by Alibaba, which has held discussions with all major horizontal player I the country. India’s online market is expected to reach $69billion by FY20, according to Goldman Sachs.
By Sasha Square Team
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Source: Sasha Square