China’s Alibaba and Ant Financial sell entire stake in Paytm Mall for Rs 42 crore
Five years after backing Paytm, Chinese billionaire Jack Ma-led Alibaba and Ant Financial have sold their entire stake in their e-commerce platform Paytm Mall.
Alibaba sold its 28.34 per cent stake and its subsidiary Ant Financial sold its 14.98 per cent stake.
The two Chinese companies together sold their 43.32 per cent stake. Paytm E-commerce, the parent company of Paytm Mall, bought back shares for Rs 42 crore.
The deal was valued at just Rs 100 crore to the company. This was a major climb 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 China on the lines of Alibaba’s T-Mall. In 2017, Paytm raised $200 million (Rs 1,551 crore at current rate) from Alibaba at a valuation of around $1 billion in its first funding.
Paytm had raised over $800 million from several top investors including Alibaba, Ant Financial and SoftBank.
Paytm Mall said it does not agree with reports suggesting a steep fall in its market valuation as a result of Alibaba’s decision. It said that in this case, the exit price of Alibaba and Ant Financial, an investor, “does not reflect the valuation” of the company.
Paytm E-commerce said it suffered operating losses despite huge investments in expanding its business and market share. It said the COVID-19 pandemic posed “unique challenges” and “demanding conditions” for the company’s growth. It added that additional capital would be needed to keep pace with India’s growing online business space and unique business model.
According to a report in Mint, the company said that the fintech sector remains “highly competitive” with several big players.
“Against this background, the specified shareholders (Alibaba and Ant Financial) have expressed their willingness to exit their investment in the company,” it added.
Paytm Mall appeared hopeful of a comeback in the future as it comes closer to the Open Network for Digital Commerce (ONDC), a UPI-like platform developed by the government 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,” a company spokesperson said.