Alibaba's First Investment in India's Ecommerce Industry

Paytm, which was launched as an ecommerce website in 2010 in India, which then became India’s largest mobile payment platform, announced a fresh round of funding of $500 million from Chinese e-commerce giant Alibaba and its finance arm, Zhejiang Ant Small & Micro Financial Services Group. The funding will be used for technology development and marketplace operations of the company.

Initially, Ant Financial was supposed to invest $575 million in One97 Communication, Paytm’s parent company in 2 rounds. Paytm received the first tranche of $200 million in March 2015. Alibaba agreed to increase the second tranche to $500 million instead of $375 million. Reports suggest that Alibaba and Ant Financial will acquire 30% of stake in the company, which is equivalent to $2 billion after the deal is closed. Paytm’s parent company, One97 Communications has other global investors like SAIF Partners, Sapphire Venture and Silicon Valley Bank.

It isn’t surprising that Alibaba entered into this deal with Paytm. Paytm’s mobile wallet has over 100 million users in India. It is accepted at more than 80,000 merchant locations and processes 75 million transactions every month. On the other hand, China’s biggest ecommerce platform, Alibaba wants to expand its services globally and wants more local merchants around the world to use Alibaba to sell their products and services. This deal is a great way for Alibaba to tap into the Indian ecommerce market.

Sources also reveal that Indian customers will be able to make purchases on Alibaba’s website using their Paytm wallet. On the other hand, Chinese customers using Alipay, a mobile payments platform by Alibaba, can shop on Paytm’s ecommerce platform. The same will apply for merchants or sellers in India and China. They will be able to sell their inventory on both the portals.

About Paytm: Paytm is India’s largest mobile commerce platform. Paytm started by offering mobile recharge and utility bill payments and today it offers a full marketplace to consumers on its mobile apps. Paytm has over 100 million registered users. In a short span of time, Paytm has scaled to more than 60 million orders per month. Paytm is the consumer brand of India’s leading mobile internet company, One97 Communications. One97 investors include Ant Financial (AliPay), SAIF Partners, Sapphire Venture and Silicon Valley Bank.