Alibaba continues to grow its payment platform, announcing that it will buy up stakes in Paytm, for USD177 million.
Paytm is an online marketplace for online wallet and digital payments based in Delhi, India. It launched in August 2010 and has since been valued at close to USD1.5 billion. Paytm (Payment Through Mobile) employs more than 13,000 people with 3 million offline merchants.
Alibaba, along with its investment firm SAIF Partners, will account for 62 per cent of Paytm’s overall shares. SAIF Partners was an early investor in One 97, the mother company of Paytm.
Alibaba, through its payment affiliates, held close to 40 per cent shares prior to this recent re-investment.
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The deal will ultimately pave a way for Alibaba to enter India, a market that is expected to transact close to USD69 billion in online retail purchases by 2020. This puts Alibaba in the front line to take on Amazon, US-based e-commerce player that has heavily invested in growing its India business.
Alibaba also owns less than 5 per cent of online marketplace Snapdeal, which has become the third leading online retailer in India. Experts and analysts feel that Alibaba has a long way to go if it wants to compete with Amazon’s USD5 billion commitment to India.
“It looks like a Mexican standoff between 4 to 5 players waiting for other players to blink,” said director of Inventus, Rutvik Doshi. “India has become a proxy battlefield between Amazon and Alibaba, and there may be a few casualties.”