Japanese conglomerate SoftBank is in discussions to pour in around $3 billion in Paytm Mall, as reported by media.
However, it can only do so once it gets free from Flipkart clause that restricts it from investing more than $500 million until 2020, said sources close to the development.
Earlier in April, SoftBank had pumped in $400 million, while about $45 million came from Alibaba in Paytm Mall. The Jack Ma-led group owns a majority stake in the e-commerce marketplace.
Alibaba and Ant Financial together held about 55 percent of Paytm Mall. Both have poured in about $177 million into Paytm Mall in its $200 million round in March last year. About $23 million had come from One97 Communication’s early backer SAIF Partners.
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Since then SoftBank held talks to invest $3 billion in the firm, the report added.
As of now, SoftBank is reportedly undecided on selling its Flipkart shares because of tax implications.
SoftBank will get around $4 billion if it sells its entire 21 percent stake in Flipkart.
What implications will this have in the Indian e-commerce market?
In last few years, the face of Indian e-commerce has undergone a massive shift since SoftBank and Alibaba have begun investing in the fledgling internet economy. SoftBank had alone pumped in over $5 billion in four companies including Paytm, Oyo, Flipkart, and Ola.
Bengaluru-based Flipkart had received a staggering $2.5 billion round in August last year from SoftBank.
SoftBank had also invested about $900 million in Snapdeal in the hope the e-tailer would be able to challenge Flipkart’s market leadership.
Meanwhile, Alibaba along its payment affiliate Alipay had invested about $460 million in e-grocer Bigbasket, food tech major Zomato and $35 million in Pune-based logistics company Xpressbees to foster Paytm Mall’s business. The three companies are working closely together.
Last week, the US retail giant Walmart bought 77 percent stake in Flipkart for about $16 billion. This has turned Indian e-commerce battle into three-way involving Walmart, Amazon, and Alibaba, which might be backed by the Japanese conglomerate, SoftBank.
If SoftBank exits Flipkart and invests additional capital in Paytm Mall, the alignments would become similar to the Chinese market where SoftBank is a big shareholder in Alibaba, which competes with Tencent and Walmart-backed JD.com.
Tencent will remain one of the largest minority shareholders in Flipkart after the Walmart deal.
Unlike Amazon and Flipkart, Paytm Mall focuses on bringing small merchants online. It follows o2o (offline to online) strategy and eyes at unorganised markets across segments including electronic, fashion and FMCG. Paytm Mall intends to touch $10 billion in annualised GMV by the end of this fiscal year.
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