Watch out Flipkart, Amazon! Alibaba is raking in $177 million in Paytm Mall

Chinese e-commerce giant Alibaba is going to increase its holding in Paytm Mall by investing $177 million, or Rs 1, 180 crore.

This will pit Alibaba against Amazon and Flipkart.

Besides, SAIF Partners will also participate in the $200-million round in Paytm E-commerce Private Limited.

Alibaba along with its payments affiliate Ant Financial has a combined shareholding of 40% in the unit. With the latest investment, the Chinese major will increase its holding to 62%.

"This (the Alibaba shareholding) will come down as the company creates a large employee stock option pool (Esop) to attract and retain talent," one person directly aware of the developments told ET, adding “we want to build this (Paytm marketplace) into the market leader of ecommerce in India, and Esop will be for both new and existing employees.


As per reports, this will take Paytm E-commerce valuation to around $1billion.


"It looks like a Mexican standoff between 4-5 players waiting for other players to blink. India has become a proxy battlefield between Amazon and Alibaba, and there maybe a few casualties," Rutvik Doshi, director at venture capital firm Inventus, who reckons that discounts for consumers will continue as the combatants face off, told ET.

Meanwhile, despite Paytm E-commerce to be at the helm, Alibaba is also making some local hires.

Paytm E-commerce is also likely to become the vehicle for consolidation going forward in the online retail space by Alibaba, which has held discussions with all major horizontal players in the country. India's online retail market is expected to reach $69 billion by FY20, according to Goldman Sachs.