Anil Ambani-controlled Reliance Capital, one of India’s largest asset management companies, has sold its stake in the country’s leading mobile wallet and payments company Paytm for Rs 275 crore to China-based e-commerce giant Alibaba group, while retaining its free of cost stake in the company’s e-commerce unit Paytm Mall, PTI reported on Tuesday citing unidentified sources.
Reliance Capital had a 1% equity stake in One97 Communications, the owner and operator of Paytm, which it had bought for as little as Rs 10 crore. It had got an additional stake in Paytm Mall free of cost by virtue of its investments in the parent firm, when the company hived its e-commerce business into a separate unit last year.
Earlier in December, One97 Communications’ founder and Paytm’s Chief Executive Officer Vijay Shekhar Sharma had sold 1% from his stake in the parent company for about Rs 325 crore, valuing it at about Rs 32,500 crore ($4.8 billion).
Earlier last week, Alibaba, which was widely tipped to be eyeing an entry into India for a long time, apparently did so quietly by picking up a significant equity stake in Paytm Mall, valuing the newly-formed marketplace business at over $1 billion, at a time when the incumbents in the country are reeling under operational pressures leading to retrenchments and cut in valuations.
Alibaba’s $177 million investment in Paytm Mall, along with $23 million by the private equity player SAIF Partners, is sure to pit it against Amazon India, Flipkart, Snapdeal, Shopclues and others, making it one among the most prominent players in the fast-crowding Indian e-commerce industry.
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Earlier last year, Paytm hived off its e-commerce business into a separate arm called Paytm Mall, with the speculations flying high that it would lead to a prominent investor putting in funds into the new entity.
Alibaba already has a significant equity stake — currently believed to be at about 41% — in Paytm’s holding company One97, led by businessman Vijay Shekhar Sharma. Both, Alibaba and SAIF Partners are early investors in Paytm through their investments in One97.
The fresh investment by Alibaba in Paytm Mall will reportedly take its stakeholding in the e-retailer to 36.31%, while SAIF Partners will hold 4.66% post the funding.