Ant Financial to take 25pc stake in Paytm owner
Friday, 6 February 2015
MUMBAI, Feb 5 (Business Standard): Ant Financial, an affiliate of Chinese e-commerce giant Alibaba Group Holding, would take a 25-per cent stake in Noida-based One97 Communications, which runs online payment platform Paytm, the companies said in a joint statement on Thursday.
The deal represented Ant Financial's first investment in an Indian company, said the statement. Ant Financial, which runs Alibaba's Alipay online payment platform, will provide Paytm "with strategic and technical support for its business", it added.
Paytm will use the proceeds from the deal to grow its mobile payment ecosystem and boost its commerce user base. Ant Financial, which also runs Alipay Wallet, the largest mobile payment service provider in China with over 190 million users, will give Paytm strategic and technical support for its business.
Alibaba, through two of its companies, is picking up a total of 40 per cent stake in One97 Communications for about $575 million, at a valuation of $1.5 billion. SAIF Partners, which already has investments in the company, will be putting in about $50 million.
"With over one billion people, India's payment market has vast untapped potential," said Cyril Han, vice-president of Ant Financial. "As smartphone use continues to rise in India, we see great opportunity in the mobile wallet space. And Paytm, as a leader in this field, is best equipped to build a mobile payment ecosystem in the country," he said.
Together with Ant Financial, Paytm would change the landscape of mobile payments and commerce in India, said Vijay Shekhar Sharma, founder & chief executive of One97 and Paytm.
Citi and Goldman Sachs served as financial advisors for the deal. Simpson Thacher & Bartlett LLP, Trilegal and Amarchand & Mangaldas & Suresh A Shroff & Co were legal advisors, while KPMG was diligence adviser.
Sharma had earlier told Business Standard that his equity holding in One97 Communications would come down to 22 per cent from 35 per cent. SAIF Partners, which has about 50 per cent equity in One97 Communications, will hold 33 per cent in the company after the fresh infusion of $50 million, and continue to be the single largest equity holder in Paytm. The remaining equity is held by minority shareholders, including Reliance Capital, Silicon Valley Bank and employees. These holdings will be diluted after the deal.