Alibaba and its financial affiliate Ant Financial have agreed with One97 Communications to make a strategic investment in Paytm, India’s largest mobile payment and commerce platform.
The investment is estimated to be $680m with Alibaba acquiring a 20 per cent stake in the company, sources close to the deal told The Economic Times. Ant Financial first invested in Paytm back in February when it acquired the 25 per cent stake for $575m and Alibaba’s investment lowers Ant Financial’s stake to 20 per cent.
This shows that Alibaba has decided to make a firmer commitment after first sounding out the company via its affiliate. In total, through two bodies, Alibaba will own 40 per cent of Paytm. It also means that Alibaba finally becomes a new investor in the company.
Alibaba says the investment will be used “to allow Paytm to achieve scale and develop its vibrant mobile commerce and payment ecosystem in India and invest in marketing, technology and talent”.
It went on to explain that the strategy behind the investment was to allow the company to enhance the opportunities in India’s fast-growing mobile e-commerce marketplace and digital finance industry. Paytm says more than 100 million people use its mobile wallet, which Indian people use to make e-commerce purchases. It says it records over 75 million transactions each month.
“India is an important emerging market with strong e-commerce potential, and we look forward to partnering with Paytm to deliver innovative products and services to consumers,” said Daniel Zhang, Chief Executive Officer of Alibaba Group.
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