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Alibaba splashes the cash with Paytm to fund Amazon challenge

Indian mobile payments service provider and e-commerce company, Paytm has received an investment of $200m, led by $177m from Alibaba and $23m from SAIF Partners.

With this investment, Alibaba Group will increase its stake in Paytm to 62% from the present 40%. The investment will enable Paytm to compete against existing players like Amazon and local online retail players Flipkart and Snapdeal.

The information was disclosed by Paytm in one of its filings before the Registrar of Companies in India.

The funding will be used to strengthen Paytm’s ecommerce business which was separated from its payments business last year.

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Business Standard reported that with this deal, Alibaba is getting a step closer into making its formal entry into the Indian online retail market, which is estimated to be worth around $16bn.

Read more: Alibaba, Samsung and Louis Vuitton to fight fake goods with big data

Last year, One97 Communications, the owner of the Paytm was valued at $4.8bn, when it raised $60m from Mediatek.

Paytm

Alibaba’s support is expected to work to the company’s advantage, as it could get access to Alibaba’s larger ecosystem around the world including its e-commerce company Lazada Group in Southeast Asia.

At present, it claims to have more than 1,40,000 sellers, 68 million stock keep units (SKUs), 17 fulfillment centres and 40 courier partners across India and is aiming for a fair-share in the Indian online retail market.

Recently, the Indian e-commerce business launched Paytm Mall app for Android devices while iOS app will be launched soon. This app is claimed to be in-line with Alibaba’s Tmall.

Through the app, Paytm will sell products such as mobile phones, electronics, fashion, groceries.

The company was successful in pushing forward its mobile payments app across the country, following Indian government’s demonetisation decision last November. Presently, it is in the process of setting up a payments bank.
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CBR Staff Writer

CBR Online legacy content.