Chinese ecommerce company Alibaba, is reportedly planning to invest a massive $200 Mn funding into Paytm’s ecommerce entity. Besides, this deal also signifies the Alibaba will mark the formal entry in India to compete with US’ Amazon and India’s Flipkart.

The deal has not been made official yet, however, the reports suggest that it will be announced in coming weeks.

Alipay, the payments affiliate of Alibaba, along with investment firm SAIF Partners, have also participated in this fresh funding which is expected to value the online marketplace at over $1 Bn.

With this development, “The Alipay-Alibaba combine will now own over 50 per cent in the unit. The online marketplace business will either be called PayTM Mall or PayTM Bazaar,” said the person who estimates the business has annualised gross merchandise value (GMV) of about $1 Bn.

For Alibaba, entering the Indian market will mark an expansion of its global footprint. It will also offer a chance to grab a slice of one of the world’s most attractive and largest markets for online retail, which was worth around $14 to 16 Bn at the end of 2016, up from about $11 Bn in 2015.

Earlier, the company was expected to begin its own business in India as TMall – its business-to-consumer brand in China. Paytm is now expected to spin off the ecommerce business into a new mobile application and a separate website this month. Also, Alibaba now has an advantage in the B2B sector as there aren’t too many competitors.

Also, Paytm transferred its wallet licence to the payments bank unit last year, which is expected to launch operations in the next few months. Sharma owns a 51% stake in the payments bank while the rest is owned by One97 Communications. One97 Communications was valued at over $5 Bn the last time it raised about $60 Mn from new investor Mediatek last year.

Image credit.

Alibaba Paytm
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