Alibaba furthers India expansion with US$177m deal for 36pc stake in Paytm E-Commerce

Alibaba Group is investing US$177 million in Indian online retail giant Paytm E-Commerce, which would swiftly expand the Chinese company’s operations in the world’s sixth-largest economy.

“India is an important emerging market with great potential. We are committed to working with local partners with the aim of developing a long-term, sustainable business,” a spokesman for New York-listed Alibaba told the South China Morning Post on Friday.

It would mark the second major regional expansion for Alibaba since April last year, when it acquired a controlling stake in Southeast Asian e-commerce services provider Lazada Group for US$1 billion.

Alibaba Singapore E-Commerce, a unit of Hangzhou-based Alibaba, led a new investment round in Paytm E-Commerce that raised a total of US$200 million, including US$23 million from private equity firm SAIF Partners, according to a filing with the Registrar of Companies in India.

Alibaba will have a 36.31 per cent stake in Paytm E-Commerce, while SAIF will take a 4.66 per cent interest.

That transaction has turned the Indian online retail provider into one of the country’s few start-ups with a US$1 billion valuation, or “unicorns”, according to Indian media reports.

India’s other unicorns include e-commerce company Snapdeal, online transport network firm Ola Cabs, renewable energy company ReNew Power Ventures, messaging app operator Hike, online marketplace operator ShopClues, mobile advertising service InMobi and mobile internet company One97 Communications, according to global venture capital database service CB Insights.

One97, which operates the popular Paytm digital payments and online marketplace operation, last year spun off its e-commerce activity into a separate business.

Alibaba, which own the Post, and affiliate Ant Financial Services previously made strategic investments in the larger Paytm operation in 2015, including a reported US$500 million funding in September that year, that built up their combined stake to about 40 per cent.

Ant Financial, which is also an investor in One97, and Alibaba would have more than a 60 per cent interest in the Paytm e-commerce business following the latest investment, according to Indian media reports. Alibaba also has a small stake in Snapdeal.

News of the investment comes days after Paytm E-Commerce launched a new online marketplace called Paytm Mall, which was closely modelled after Alibaba’s business-to-consumer shopping platform Tmall.com.

The Paytm Mall platform, which launched on February 27, will provide customers with access to 68 million products sold by 140,000 online merchants, according to Paytm E-Commerce.

Logistics will be handled through 17 fulfilment centres operated by third-party warehouse operators, along with 40 courier services, it said.

Alibaba’s expansion into India’s fast-growing e-commerce market will likely support cross-border retail e-commerce purchases by consumers in mainland China. That market segment reached an estimated US$85.76 billion last year, according to research firm eMarketer.