As Paytm splits payments, marketplace, Alibaba may enter as e-comm player

Paytm will spin out its online store for products and services into a separate company as soon as Vijay Shekhar Sharma finds an investor for the marketplace business.

Paytm will spin out its online store for products and services into a separate company as soon as Vijay Shekhar Sharma finds an investor for the marketplace business.

CEO of Paytm, Vijay Shekhar Sharma at his office in Noida , India. (HT file photo)

A source familiar with the matter said the marketplace will be a new company, and not part of One97, the company that owns Paytm. “Shareholders of One97 will hold shares in the new company, but it will be a completely separate entity. There will be a demerger,” the source said.

Sharma, founder and CEO of One97, wants to form two companies – one for payments and banking, and one for marketplace. The banking business will be a Paytm subsidiary.

Chinese internet conglomerate Alibaba, the largest investor in One97, may take-up this opportunity to enter India as an e-commerce player. “That is possible if Alibaba wants to form a joint-venture,” the source said.

To be sure, nothing stops Alibaba from starting a marketplace in India on its own. But, the company is not known to have large greenfield setups.

Alibaba Group president Michael Evans had said earlier that he is closely looking at opportunities in India. Evans and K Guru Gowrappan, Alibaba’s global MD, spoke to Tata’s Cyrus Mistry for a possible tie-up to start e-commerce operations.

The RBI wants to make sure that the funds allocated for the marketplace are not spent anywhere else. At present, all businesses are being funded by One97.

After the demerger, One97 will focus on payments of recharges and utility bill, and building offline-to-online payments and the banking business.