20 May , 2022 Fdiindia
Jack Ma Sells His Share of Paytm Mall for Rs.42 Crore
Paytm E-commerce has repurchased its total stake held by Alibaba and another investment firm, Antfin (Netherlands) Holding, from the company for ?42 crores, according to the company's filing with the Registrar of Companies. The filing values Paytm E-commerce at ?100 crore, which is significantly less than the $3 billion dollar valuation it received when it last raised funds in 2020.
Back in 2017, Paytm Mall, an online marketplace inspired by AliExpress and Alibaba's Tmall in China, raised $200 million from Alibaba at a valuation of around $1 billion. SoftBank and Ant Financial, the conglomerate controlled by Alibaba's founder Jack Ma are also part of the deal.
Paytm said, "We are focusing on building a sustainable business in partnership with ONDC and are excited about the future of e-commerce in India. As part of the shift in the business direction of the company, PEPL also saw the exit of beta testers. The capital reduction process price is not reflective of the valuation we put on ourselves or Paytm Mall, as even our free cash balance is significantly high than this value. A simple metric to consider would be that our free cash balance exceeds this capital reduction quoted amount by far!
Paytm's e-commerce company has presented an offer in which they want to reduce the company's existing share capital, and any shares traded at a premium will be re-evaluated. The EGM is happening this Friday, May 23, if the conditions are met.
"Despite investing significant amounts of capital in growing its business and expanding market share, the company suffered setbacks. Given that the online business space is constantly evolving with the onset of unique new business models, changing technologies and new regulations, it is expected that additional capital and efforts will be required to be committed. The sector continues to be highly competitive and is marketed by the presence of many best-in-class companies.
Finally, the ongoing pandemic has thrown up unique challenges for businesses. We spoke to officials at the company, and they've told us that they're doing their best to deal with things while staying on top of market economics and demanding circumstances. In particular, they work closely with their target audiences to make sure that they are more than in line with their needs and expectations at all times.
"Against this backdrop, the specified investors have expressed their desire to exit their investments in the company," it stated.
Ecommerce platform Gumtree is soliciting shareholder approval to wind up things and liquidate the company's assets to inculcate a new business model. "We are happy to let you know that this is an ongoing process that we want to transform our path of growth as an organisation, putting forth policies as per market trends and customer requirements," the company said in an official statement.
On May 15, Paytm E-commerce announced that it would pivot to Open Network for Digital Commerce (ONDC) as its primary focus and explore opportunities in the exports business in place of traditional physical goods e-commerce. "As part of the shift in the business direction of the company, Paytm E-Commerce also sees the exit of early investors Alibaba and Ant Group.
ONDC also referred to at times as the UPI of e-commerce and India's next Amazon and Flipkart, has already raised $200 million in funding from various investors that include TransLink Capital, Alibaba and SAIF Partners. ONDC posted revenue of $149 million for FY2021.
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