Alibaba to invest in Paytm; enters Indian mCommerce space

Alibaba will acquire 25 per cent stake in One97 Communications, the parent of mobile commerce firm Paytm…

Alibaba to invest in Paytm; enters Indian mCommerce space

Alibaba will acquire 25 per cent stake in One97 Communications, the parent of mobile commerce firm Paytm, as the Chinese eCommerce giant makes its debut in the rapidly expanding mCommerce space in India.

Ant Financial Services, part of the Alibaba Group, today said in a statement it has entered in a strategic agreement to acquire “a 25 per cent stake in One97 to support the growth of mobile payment and commerce platform in India”.

Alibaba is the world’s biggest e-commerce firm, which raised USD 25 billion through IPO in the US last September — the largest by any firm globally.

“Paytm will use the funds to grow its mobile payment ecosystem and further boost its commerce user base. The deal represents Ant Financial’s first-ever investment into an Indian company,” the statement added.

Ant Financial will also provide Paytm with strategic and technical support for its business.

“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial VP Cyril Han said.

As smartphone use continues to rise, Ant Financial sees a great opportunity in the mobile wallet space in Indian and Paytm is best equipped to build a mobile payments ecosystem in the country, he added.

Ant Financial and Paytm will also build on synergies in the mobile wallet front in order to offer Indian consumers comprehensive product and services and to tap the significant potential of the India mobile payment market, it said.

“We are pleased to partner with Ant Financial in India. I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications Founder and CEO Vijay Shekhar Sharma said.

Citi and Goldman Sachs served as financial advisors on the deal, while Simpson Thacher & Bartlett, Trilegal and Amarchand & Mangaldas and Suresh A Shroff & Co acted as legal advisors. KPMG served as diligence advisor.

Established in October 2014, Ant Financial Services Group focuses on small and micro enterprises (SMEs) and consumers. It operates business like Alipay, Yu’e Bao, Zhao Cai Bao and Ant Credit and Alipay Wallet — largest mobile payment service provider in China with over 190 million users.

One97 Communications is a mobile Internet firm, which runs Paytm mobile payment and commerce platform. It is backed by marquee investors such as SAIF Partners, Sapphire Ventures and Saama Capital.

In November, on a visit to India, Alibaba founder Jack Ma said he is keen to invest more in India and help technology entrepreneurs.

According to research firm IDC, Alibaba is the world’s largest online and mobile commerce company by GMV (gross merchandise value) in 2013.

For the quarter ended December 31, 2014, Alibaba’s gross merchandise value stood at USD 127 billion. Its China retail marketplaces had 334 million annual active buyers in the 12 months ended December 31.

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