Indian payment company Paytm landed a major deal on Friday with a combined investment of $200 million from Chinese e-commerce giant Alibaba and investment fund SAIF Partners.
With the $177 million that the company will be pumping into Paytm’s e-commerce business Paytm Mall, Alibaba will not only increase its stake in Paytm but will also formally enter the Indian e-commerce market.
The remaining $23 million will be invested by SAIF Partners, who will also hold 59,812 shares in Paytm, reported Digbijay Mishra for ToI. Alibaba Singapore meanwhile has taken 4,74,155 shares.
This investment is not Alibaba’s first for Paytm. Earlier in September 2015, it had pumped in $500 million, giving it a 40% stake in Paytm’s parent company One97, and also making it an official investor in the company. With the most recent round of investment, Alibaba Group’s controlling stake in Paytm will be over 50%.
Paytm, which was originally launched as a mobile payments service in 2010, has been expanding its operations steadily, and entered into the e-commerce sector in 2014.
Paytm Mall is modelled on the concept of ‘Mall and Bazaar’ combination, reported Inc42, and has more than 1.4 lakh sellers across 1,000 cities, selling 68 million products. Paytm Mall is modeled closely after Alibaba-owned Tmall and has products spanning categories like fashion, home furnishings and electronics.
The platform also intends to add more than a billion products from global sellers in the coming six to eight months.
Apart from mobile transactions and e-commerce, Paytm also branched into banking in January with the RBI finally giving it a nod to launch Paytm Payments Bank.
With this move, Alibaba is bound to be pitted against e-commerce bigwigs like Amazon India, Flipkart and Snapdeal, reported Financial Express.
While Indian companies Flipkart and Snapdeal are trying to cut their losses and become profitable, Amazon has been aggressively marketing its new ventures in India, like the video-streaming service Prime. In terms of market share, Amazon is currently in second place, having overtaken Snapdeal and is closing in on Flipkart.
With Alibaba aggressively investing in Indian e-commerce, it is bound to be pitted against Amazon, reported Durba Ghosh for Tech In Asia. Apart from mobile transactions and e-commerce, Paytm also branched into banking in January with the RBI finally giving it a nod to launch Paytm Payments Bank.