China's Alibaba Group is in advanced talks to increase its stake in Indian e-tailer Paytm to 40 per cent, underscoring the world's largest ecommerce firm's keenness to be a major player in India's rapidly expanding Internet retail sector.
Alibaba's financial arm Ant Financial, which runs the Alipay online payment platform, is already an investor in Paytm's parent, having agreed in February to buy a 25 percent stake.
On Sunday, ‘Deccan Herald’ reported that Alibaba has unveiled its Trade Facilitation Center (TFC), a business-to-business (B2B) platform to link SMEs with logistics, banking and other services in India. “The TFC will allow SMEs to expand their operations throughout India and beyond,” said Alibaba Channel Director Bhushan Patil in a release, according to the report.
Alibaba had originally made a deal with Paytm to invest $575 million. The investment was to be made in two parts, with Alibaba’s Ant Financial making an investment of $200 million in the first installment, and acquiring a 25% stake in the company. This investment made Paytm one of the fastest Indian startups to reach valuation of $1 billion.
The new deal, under which Alibaba is plans to invest $600 million, will also include the second installment of $375 million the previous deal. The latest investment will increase Paytm’s valuation by nearly three folds to $3.7 billion.
Paytm is among the bidders to become a payments bank, alongside Airtel M Commerce Services, a subsidiary of Bharti Airtel. Vodafone is also thought to be interested.