China’s Alibaba and Ant Financial to Redeem Entire Stake in Paytm Mall for Rs 42 Crore
Five years after backing Paytm, Chinese billionaire Jack Ma-led Alibaba and Ant Financials have sold their entire stake in Paytm Mall, the e-commerce platform.
Alibaba sold its 28.34 percent stake and its subsidiary Ant Financials sold its 14.98 percent share.
Together, both Chinese companies sold their 43.32 percent stake. Paytm E-commerce, the parent company of Paytm Mall, bought back the shares for Rs 42 crore.
The deal valued the company at just Rs 100 crore. That was a huge drop for Paytm Mall since its last fundraising in 2020 when it was valued at $3 billion (Rs 21,000 crore).
Paytm Mall was built in line with Alibaba’s T-mall in China. In 2017, Paytm had raised $200 million (Rs 1,551 crore at the current rate) in its first financing from Alibaba at a valuation of approximately $1 billion.
Paytm had raised more than $800 million from several top investors, including Alibaba, Ant Financial and SoftBank.
Paytm Mall said it disagreed with reports pointing to a massive drop in market valuation as a result of Alibaba’s decision. It said the exit price of an investor, in this case Alibaba and Ant Financial, “doesn’t reflect the company’s valuation.”
Paytm E-commerce said it suffered operating losses despite heavy investments in expanding its business and market share. It said the Covid-19 pandemic has balanced “unique challenges” and “demanding conditions” for the company’s growth. It said additional capital would be needed to keep pace with the changing online business space and unique business models in India.
According to a report in Mint, the company said the fintech sector remains “highly competitive” with several major players.
“Against this background, the specified shareholders (Alibaba and Ant Financial) have expressed their desire to end their investments in the company,” it added.
Paytm Mall looked hopeful of a comeback in the future as it moves closer to the Open Network for Digital Commerce (ONDC), a government-developed UPI-like platform for e-commerce.
“We are focused on our transition to build a sustainable business in partnership with ONDC and are excited about the future of e-commerce in India,” added a company spokesperson.
