Jack Ma-Led Alibaba Group Exits Paytm Mall, Sells 43.32% Stake Back to Company

The development comes at a time when Paytm Mall aims to join the government-backed ONDC network.

Reserve Bank of India (RBI) on Friday directed Paytm Payments Bank Ltd to stop onboarding new customers with immediate effect, due to certain “material supervisory concerns."

(Photo: Deeksha Malhotra/The Quint)

The Jack Ma-led Alibaba Group, which was the largest investor in Paytm Mall, has unloaded its complete stake and exited Paytm E-commerce Pvt. Ltd (PEPL), the parent of Paytm Mall, according to a report by Mint. This comes five years after it made its largest investment in India's e-commerce market.

Alibaba sold a 28.34 percent stake, while its subsidiary Ant Financials offloaded another 14.98 percent. The group has sold a combined 43.32 percent stake for Rs 42 crore. The shares were bought back by Paytm E-commerce.

This move values the company at a lowly Rs 100 crore, when compared to its most recent $3 billion (Rs 21,000 crore) valuation during its last round of fundraising in 2020, reported Mint.

"We are focused on our transition to build a sustainable business in partnership with ONDC and are excited about the future of e-commerce in India," a Paytm Mall spokesperson said.

The company further said that they are facing "unique challenges" due to the ongoing pandemic. In light of having to deal with "declining market economics" and "demanding circumstances that impose continuous pressure on financial metrics," Alibaba and Ant Financial have expressed their desire to exit their investments in the company.

Falling Valuation

In 2021, the Hurun Global Unicorn Index noted that the valuation of Paytm Mall dropped below $1 billion.

However, a company spokesperson said: "The exit price of any investor(s) in the company via capital reduction process is not reflective of the valuation of the company and neither does the exit have any link to any FDI laws. One simple metric is to consider that our cash balance itself is significantly higher than the quoted number in media reports, which establishes that the suggested low Fair Market Valuation is completely inaccurate."

The development comes days after Paytm Mall announced its intention to join the government-backed Open National Digital Commerce (ONDC) network as its "primary focus."

ONDC is a network aimed to facilitate business across segments, based on open protocol. The goal is to check digital monopolies and enable small and medium businesses to enter the e-commerce sector.

In 2017, Paytm Mall raised $200 million from Alibaba at a valuation of almost $1 billion. Till date, the company has raised more than $800 million in capital from Alibaba, Ant Financial, eBay and SoftBank.

The company is also set to hold an extraordinary general meeting on 23 May 2022, the report said.

(With inputs from Mint.)