Reliance Capital sells stake in Paytm to Alibaba for Rs275 cr

Anil Ambani's Reliance Capital has sold its 1-per cent stake in the country's leading mobile wallet Paytm for Rs275 crore to Chinese ecommerce giant Alibaba Group.

The financial services arm of Reliance Group had invested Rs10 crore for this stake in Paytm. The new deal gives a valuation of over $4 billion to the e-wallet firm, which has been backed by Alibaba group as a strategic investor.

Sources said that Reliance Capital has retained a stake in Paytm e-Commerce, which it had got free of cost by virtue of the investment in the parent firm. In the latest fund-raising round, Paytm e-Commerce was valued at $1 billion.

In December last year, Paytm founder and chief executive Vijay Shekhar Sharma had sold 1 per cent of his holding in One97 Communications, the parent company of the digital payments firm, to raise about Rs325 crore. This money was to be pumped into the group's payments bank operations, which are slated to commence soon.

Alibaba Singapore E-commerce, along with investment firm SAIF Partners, will also invest $200 million in Paytm's online marketplace unit.

At present, Jack Ma-owned Alibaba, the largest e-retailer in the world, has 40-per cent stake in the unit along with its investment arm Ant Financial, while Paytm's Sharma owns about 21 per cent in the company.

 According to media reports, Alibaba was mulling over an option to invest Rs1,180 crore to raise its stake in Paytm Mall. This move will raise its holding to 62 per cent with the latest investment.

The higher stake in Paytm will pit the Chinese ecommerce player against America's Amazon and local market leader Flipkart.

The online retail market is estimated to be worth $14 to $16 billion at the end of 2016, up from about $11 billion in 2015, say analysts.

In 2016, there were reports of Alibaba buying Snapdeal. But by the year-end, the possibilities of any deal were ruled out. Earlier, Alibaba was said to eye a stake in India's online marketplace Flipkart too but the deal could not fructify.

Alibaba is principally engaged in online and mobile commerce through offering of products, services and technology that enable merchants, brands and other businesses to transform the way they market, sell and operate in the People's Republic of China and internationally.