China's Alibaba invests undisclosed sum in Paytm

Chinese e-commerce giant Alibaba Group and its payments arm Ant Financial Services Group are investing an undisclosed amount in Indian online payments processor and marketplace Paytm, the companies said in a statement today.

This comes about a month after Alibaba invested several million dollars in India's second-largest e-commerce firm Snapdeal.

While this is Alibaba's first direct investment in Paytm, its affiliate Ant Financial in February committed to buy a 26-per cent stake in Paytm for about $575 million in a move to tap the fast-growing mobile payments business in the country.

 ''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, Daniel Zhang, chief executive officer of Alibaba Group, said in the statement.

''Supporting the success of local homegrown entrepreneurial companies has long been an important part of Alibaba Group's globalisation strategy. This investment will further expand Alibaba Group's global footprint to India's thriving mobile commerce market,'' he added.

Paytm, which received a payment bank licence from the Reserve Bank of India (RBI) in August, will use the fresh capital to invest in marketing, technology, and talent acquisition.

''Ant Financial and Paytm will continue to capitalise on opportunities in mobile wallet to offer Indian consumers comprehensive products and services and to tap the significant potential of the India mobile payment market,'' the two companies said.

Alipay Singapore E-commerce Pvt Ltd has already invested $200 million into Paytm in two tranches of $65 million and $135 million for a stake of 25.88 per cent, according to documents filed with the registrar of companies.

''Paytm is building India's most dominant mobile payment and commerce ecosystem. With the Alibaba and Ant Financial partnerships, we look to bring half a billion Indians to the mainstream economy and help millions of small businesses leverage this large m-commerce opportunity.

''This investment by Alibaba and Ant Financial is a reaffirmation of their belief and commitment to the long-term Paytm opportunity,'' said Vijay Shekhar Sharma, founder and chief executive officer of Paytm.

Citi acted as the financial adviser to Paytm on this transaction.

According to Paytm, it recently crossed 100 million Paytm wallet users who carry out over 75 million transactions every month.

The company expects the number of wallets to cross 115 million by December.

In April, Paytm said it is looking to cross-monthly annualised sales of $4 billion in gross merchandising value (GMV, or the price of goods sold) by December, with nearly half of it coming from its marketplace business.

Paytm has 80,000 merchants on its platform and is expecting to touch close to 100,000 by the year-end after it allows zero-commission listings. Noida-based Paytm is also backed by venture capital firm SAIF Partners.