Jack Ma exits Paytm Mall; offloads 43% stake for Rs 42 cr: Report

Early investors in e-commerce marketplace Paytm E-commerce Pvt. Ltd, the parent company of Paytm Mall, Jack Ma-led Alibaba and Ant Financials have exited the company, said a news report.

Paytm E-commerce bought back the entire stake of Alibaba, which held 28.34 per cent, and Antfin (Netherlands) Holding, which held 14.98 per cent stake, a total of 43.32 per cent, for Rs 42 crore, reported Mint.

This values the company at a mere Rs 100 crore, plunging from the $3 billion valuation that the Vijay Shekhar Sharma-led company had from its last fundraising in 2020.

In 2017, Paytm E-Commerce Pvt Ltd had raised around $200 million from China’s Alibaba and SAIF Partners.

According to a Reuters report, in 2018 Softbank had invested $400 million that valued the company at $1.9 billion.

Paytm E-commerce has proposed reducing the company’s equity share capital and securities premium account. It said it would hold an extraordinary general meeting on 23 May.

“Despite investing significant amounts of capital in growing its business and expanding market share, the company suffered operational losses. Given that the online business space is evolving rapidly with the onset of unique 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 several large competitors. Finally, the ongoing pandemic has thrown up unique challenges for different businesses, and the company has also had to deal with declining market economics and demanding circumstances that impose continuous pressure on financial metrics,” the company said.

“Against this backdrop, the specified shareholders (Alibaba and Ant Financial) have expressed their desire to exit their investments in the company,” it said.

“The company has resolved to pursue the path of a capital reduction, to extinguish equity shares and pay surplus cash to the specified shareholders. Upon completion of the capital reduction, the company will have the right balance of the capital and shareholders, to build a path of revival and growth on a new trajectory,” it said.

Paytm E-commerce, the parent company of Paytm Mall on May 15 had announced that it will pivot to Open Network for Digital Commerce (ONDC) as its primary focus and explore opportunities in exports business in place of traditional physical goods e-commerce.

Vijay Shekhar Sharma, founder and CEO of Paytm in a tweet said: “Keeping in mind our attention to building an open platform for e-commerce, our @PaytmMall‘s business now be built on @ONDC_Official. It will be cost effective, scalable and bring even larger impact to small businesses.”

On its ONDC foray, the company said that this move enables it to create a long-term sustainable business in partnership with ONDC, which aims to democratize the purchase and sale of goods in the Indian market, driving transparency and digital independence for small businesses in the country.

The company’s shares on BSE closed 1.2% lower at Rs 584 apiece today.

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