The investment was made by Alibaba and Ant Financial, the Chinese firm’s financial services affiliate which made an undisclosed investment in Paytm February via a deal that reportedly valued the Indian company at more than $1 billion. This new deal is also undisclosed; however India’s Economic Times reports that Alibaba is spending $680 million to buy 20 percent of Paytm. That lowers Ant Financial’s stake from 25 percent to 20 percent, the report added. So, in essence, Alibaba is now making a firmer commitment having tested the water via the Ant Financial deal.
Paytm, which grew and was spun out of mobile content company One97, bears much similarity to Alibaba’s own constellation of businesses, albeit that it is far less developed. It offers a range of financial-focused services in India, including a mobile wallet app (used by Uber, among others), online recharge (for topping up phone credit and more), and a shopping service. The company said it has been working on “synergies” with Alibaba since taking funding in February, and its e-commerce marketplace is a particular area of focus given that Alibaba practically pioneered the genre in China with its Taobao site.
Paytm claims more than 100 million users of its wallet service, which helps Indians buy items online without the need for a credit/debit card or banking. The startup said the Paytm Wallet clocks more than 75 million transactions each month.
Vijay Shekhar Sharma, founder and CEO of Paytm said the company is looking “to bring half a billion Indians to the mainstream economy and help millions of small businesses leverage this large m-commerce opportunity.”
That’s very much along the lines of Alibaba and Ant Financial’s own raison d’être. Alibaba’s e-commerce services have opened Internet commerce to vendors of all sizes in China, while Ant Financial — which is independent of Alibaba and valued in the $45-50 billion bracket — has introduced a range of banking services, including its own virtual bank and flexible, micro loans.
With India becoming a more prominent target for U.S. firms than China, as the New York Times recently noted, Alibaba is making its move into India via Paytm.
“India is an important emerging market with strong e-commerce potential, and we look forward to partnering with Paytm to deliver innovative products and services to consumers… This investment will further expand Alibaba Group’s global footprint to India’s thriving mobile commerce market,” Alibaba CEO Daniel Zhang said in a statement.