(Yicai Global) Feb. 6 -- Alibaba Group Holding Ltd. [NYSE:BABA] plans to invest USD194 to 253 million (INR13.5 to 17 billion) in Paytm, India's version of Alibaba's online payment arm Alipay. Alibaba aims to aid construction of an e-commerce platform named PayTm Mall or PayTm Bazaar that will contend for the local e-commerce market against Amazon.com Inc. [NASDAQ:AMZN] and Flipkart Ltd.
India's Economic Times newspaper quoted two insiders on Feb. 3 as saying this plan kicks off Alibaba's official involvement in the Indian market. Other investors partaking in this round of investment are Alipay and Hong Kong-based SAIF Partners. These sources also said the valuation of Paytm's e-commerce business after this round of financing will reach USD1 billion, and the shares Alipay and Alibaba hold in the target's e-commerce business will rise to over 50 percent from a former 42 percent. "The e-commerce business of Paytm will be renamed PayTM Mall or PayTM Bazaar, and its annual total GMV will reach USD1 billion," the sources said.
Some analysts and investors view this investment in Paytm's e-commerce business as marking Alibaba's formal foray into international expansion. It will also help the e-commerce giant claim a share of India's online market, which in 2015 was valued at USD11 billion, a figure projected to reach USD14-16 billion in 2016.
The largest mobile payment platform in India, users may top up mobile phones via Paytm and pay bills, transfer funds and buy online goods. They may also pay in offline stores like gas stations, shops and chain retailers. Paytm also deals in clothes, shoes, bags, smart phones, and travel and movie tickets. By July 2016, the gross merchandise volume (GMV) of Paytm's e-commerce business totaled INR2.5 billion (USD37.21 million). The Reserve Bank of India recently approved Paytm's launch of its digital bank. This will offer lending and data-sharing services in cooperation with traditional banks.