Amid intense competition in the ecommerce space, Paytm is set to give tough competition to Amazon and Flipkart. Paytmâ€™s ecommerce arm Paytm Mall has raised roughly $450 million (Rs 2,900 crore) from Softbank Group and its existing investor Alibaba Group. This funding round is expected to come in four tranches, reports Mint.
This funding round values Paytm Mall at around $1.9 billion, giving it the unicorn status.
Of the total funds invested, Rs 2,600 crore will come from SoftBank, while Alibaba will put in the rest. Paytm Mall has already received the first tranche of this round, which is Rs 357.5 crore.
ET reports that Alibaba currently holds 57% in Paytm Mall. This also includes the stake of its financial arm Alipay. Once the fourth tranche of funding comes in, Alibabaâ€™s stake will be reduced to 46% and SoftBank Vision Fund will hold 21%.
While Paytm Mall has not officially put out a statement on the same, it confirmed the development. Responding to a query on the fund raise, Amit Sinha, chief operating officer at Paytm Mall said, â€śThis latest investment led by Softbank and Alibaba reaffirms the strength of our business model, growth trajectory, execution capability and the potential of Indiaâ€™s massive O2O model in the retail space.â€ť
He added that Paytm Mall will use the funds to empower shopkeepers with superior technology, logistics and to strengthen the brand and customer experience.
Paytm last raised funds in 2017 when Alibaba invested $200 million.
Interestingly, SoftBank is also an investor in Flipkart, which is currently the market leader in India ecommerce market. However, Flipkart is in talks to sell a majority stake to US retailer Walmart, which could see SoftBankâ€™s stake in Flipkart being reduced significantly.
Paytm Mall reportedly has a run rate of $3 billion in GMV and aims to reach a run rate of $10 billion by the end of FY19.
Paytm Mall, which competes directly with Flipkart and Amazon, currently has a presence in 700 towns across India. It focuses on an online-to-offline model where it partners with stores to drive sales. It has currently partnered with over 75,000 stores and aims to triple its offline presence by the end of 2019.