Jack Ma's firms exit Paytm Mall, sells 43 pc for just $5.6M

Chinese billionaire Jack Ma-led Alibaba and Ant Financials have sold their 43.32 percent stake in Paytm E-Commerce Pvt. Ltd. back to the company for just Rs 42 crore (around $5.6 million). In its last round of funding in 2020, the company was valued at $3 billion.

Jack Ma-led Alibaba held 28.35 percent of the Paytm Mall-parent company, while Ant Financial (Netherlands) Holding owned 14.98 percent. First reported by Mint, Paytm E-Commerce Pvt. Ltd has bought the entire stake from both entities.

Jack Ma was one of the oldest investors in the Vijay Shekhar Sharma-led ecommerce firm, putting in $200 million at a $1 billion valuation in its first fundraise in 2017. In total, Paytm Mall raised $800 million from various investors such as Alibaba, Ant Financial, SoftBank, Elevation Capital (SAIF Partners), and eBay.

The company was modelled on Alibaba's T-Mall in China, but has faced stiff resistance from companies such as Flipkart and Amazon in India. In a statement, reports Mint, Paytm Mall said, "The sector continues to be highly competitive and is marketed by the presence of several large competitors."

The statement pinned the exit on reasons such as the evolution of the online business space in India, declining market economics and the pandemic.

“Against this backdrop, the specified shareholders [Alibaba and Ant Financial] have expressed their desire to exit their investments in the company," it said. However, the statement continued to say that it is aiming "to build a path of revival and growth on a new trajectory."

An extraordinary general meeting has been scheduled for May 23.

In a statement sent to YourStory, a Paytm Mall spokesperson has denied that sale has changed the company's valuation. Since the company has cash reserves of more than the valuation quoted, the company's valuation cannot be seen as under $13 million, the spokesperson said.

"The exit price of any investor(s) in the company via capital reduction process is not reflective of the valuation of the company and neither does the exit have any link to any FDI laws. One simple metric is to consider that our cash balance itself is significantly higher than the quoted number in media reports, which establishes that the suggested low Fair Market Valuation is completely inaccurate," Paytm Mall said in the statement.