The world’s biggest e-commerce company, Alibaba, will acquire 25% stake in One97 Communications for $500 million (Rs 3,050 crore), as the Chinese company forays into the rapidly-expanding Indian mCommerce market.
One97 Communications runs Paytm —India’s largest mobile payment and commerce platform.Alibaba’s arm Ant Financial Services will pick up the stake.
“Paytm will use the funds to grow its mobile payment ecosystem and boost commerce user base. The deal represents Ant Financial’s first-ever investment in an Indian company,” the company said in a statement.
The deal will give Paytm the much-needed fillip to scale up operations. “I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications founder and CEO Vijay Shekhar Sharma said.
Along with funding, Ant Financial will bring in technical and operational expertise, and the experience of working in a global market like China, providing Paytm with an international exposure.
Ant Financial and Paytm will also build on synergies in the mobile wallet front to offer Indian consumers comprehensive product and services, and tap the significant potential of the India mobile payment market.
The Indian e-commerce market is expected to grow 37% to $20 billion (Rs 122,000 crore) by next year (from the current $11 billion or Rs 67,100 crore) on the back of growing internet population and increasing number of online shoppers.
“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial vice-president Cyril Han said.
Citi and Goldman Sachs served as financial advisers on the deal.