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Alibaba to raise stake in PayTm to 70%, says report

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Chinese giant Alibaba is reportedly planning to raise its stake in Indian payment-cum-e-commerce firm PayTm from current 40% to 70%. This was revealed in a report by ET which cited unnamed sources behind this information.

Alibaba has been expanding its presence in India through a string of investments among which PayTm is the most prominent one. It had invested close to $680 million in PayTm last year, claiming a stake close to 40% which included 20% share each by Ant Financial services and Alibaba.

We do not have any official statement by either of two parties so it is too soon to concretely say anything about the effect of this new development.

However, going by the happenings in recent few months, we may be looking at a significant turning point in Indian e-commerce if a Chinese giant managed to claim a stake as high as 70% in one of the most successful startups of the country.

For starters, on its funding needs, PayTm has made it sufficiently clear a few days back when CEO Vijay Shekhar Sharma said in an interview to Bloomberg that the company had enough funds to last 5 years if they continue spending at the current rate.

Moreover, PayTm already has its payments business profitable and recently even managed to witness a five times increase within a year in its active user base which touched 122 million.

Having said that, it is actually the e-commerce segment in which PayTm is facing hurdles. And this is where Alibaba comes in. Alibaba has already confirmed its plans to enter Indian e-commerce independently in the second half of this year.

And it might be looking and might have already gained considerable insight into the Indian landscape through its investments in PayTm and Snapdeal.

Moreover, according to earlier reports, PayTm was even considering to raise $300-$400 million from the Chinese giant and spin off its unprofitable e-commerce marketplace to let Alibaba organically expand in the country. This might be the deal which could let Alibaba increase its stake in the company further.

PayTm has also made other deals with Alibaba strengthening its partnership with the Chinese giant. This includes partnership with Alipay for integration between Uber, Alipay, PayTm and a deal with cloud computing platform AliCloud for expansion into the global market.

Alibaba, on the other hand, has also been beefing up its bank accounts for making new investments and acquisitions. It managed to land a loan of somewhere north of $3 Billion in March this year. Its spin-off financial arm, Ant Financial also raised a monstrous $4.5 Billion in it series B round of funding last month.

It remains to be seen how much of these funds will be invested towards expansion in India, particularly in the stake in PayTm if the reports are indeed true.

We will update this story once we get any official statements from any of the two companies.

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  • Holy F**K! Interesting timing with demonetization leading everyone to PayTM now. The financial takeover of India has begun.