Alibaba and Ant Financials, led by Jack Ma, have quit Paytm E-commerce Pvt. Ltd, the parent company of Paytm Mall, five years after making its biggest investment in India’s e-commerce business. The company is now valued at just Rs 100 crore, down from $3 billion in its most recent funding, which took place in 2020.
“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.
Paytm Mall, which was inspired by Alibaba’s T-mall in China, raised $200 million from Alibaba in its initial financing round in 2017, valued at around $1 billion. Alibaba, Ant Financial, SoftBank, Elevation Capital (formerly SAIF Partners), and eBay collectively invested more than $800 million in the company.
Paytm E-commerce said that it would call an extraordinary general meeting on May 23 to discuss decreasing the company’s equity share capital and securities premium account.
“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.