CHENNAI: Chinese e-commerce giant Alibaba’s Singapore wing Alibaba Singapore E-Commerce is leading a $200-million funding round in Paytm E-Commerce, the online marketplace arm of One97 Communications. This will mark the Chinese firm’s official entry into the Indian e-commerce market, with reports putting its stake after the investment at 62 per cent.
According to filings with the Registrar of Companies, Alibaba will invest Rs 1,182 crore ($177 million) in Paytm’s e-commerce arm.
The rest, $23 million, will be invested by venture capital firm SAIF Partners, an early investor in One97, the holding company for the de-merged Paytm online payments and e-commerce businesses.
With this, Alibaba’s stakeholding will increase from 40 per cent to 62 per cent in the e-commerce arm, NewsCorp’s VCCircle reported. While Alibaba has a stake in Indian e-commerce firm SnapDeal as well, sources say the stakeholding is between three and five per cent.
But, with 62 per cent in Paytm E-Commerce, Alibaba will finally have a majority stake in an Indian e-commerce firm.
Alibaba’s official entry into the e-commerce space will heat up the competition and force Indian e-commerce firms to look for funds more seriously. According to analysts, this will only increase the need for these firms to increase their focus on profit making.
“Flipkart has been finding it hard to raise funds and while they are reportedly close to doing so, it is because they have begun to show more operational efficiency under new leadership. This will continue to be a pre-requisite if they, and other Indian players, are to raise more funds to compete,” said an analyst who did not wish to be identified.
Aside from the entry of Alibaba formally into the Indian e-commerce market, the deal will also put Paytm E-Commerce’s valuation at more than $800 million. Paytm did not respond to queries regarding the development.
When contacted, a Paytm spokesperson declined to comment on the matter.