US-based ecommerce company eBay is investing more than discussed in Indian ecommerce company, Paytm Mall. On July 18, eBay had announced a strategic partnership with Paytm Mall along with acquiring a 5.5% stake in the Indian ecommerce marketplace. The company was speculated to be investing $150 Mn.
However, according to the Ministry of Corporate Affairs filings accessed by Inc42, Paytm E-commerce private limited is issuing 1,28,028 equity shares at a price of $1,249.73 per share to eBay Singapore Service Pvt Ltd. The transaction is worth $160 Mn.
On the basis of per value share accorded with a valuation report of June 18, the company will be valued at $2.86 Bn post-investment.
Founded in 2017, Paytm Mall is said to have recorded a gross merchandise value (GMV) of $2.1 Bn in 2018. Paytm Mall has raised $645 Mn from investors such as SoftBank, Alibaba, SAIF and Ant Financial, last valued at $2 Bn. In October 2018, Paytm Mall had recorded a net loss of $245.65 Mn in FY2018, which is 150 times the loss ($1.86 Mn) it suffered in the previous financial year.
The year 2019 started with a rejig of top-level management at Paytm Mall, and was followed by over 80% cut down in cashbacks across its online marketplace categories such as grocery, electronics and fashion.
Through this partnership, eBay inventory will be made accessible to the active customer base of Paytm Mall, a subsidiary of the Indian fintech unicorn Paytm. It would also enable eBay sellers to reach new customers in the rapidly growing Indian market.
According to Paytm Mall, the strategic partnership should allow it to overcome cross-border trade challenges such as high delivery costs, returns and long timelines, while ensuring that regulatory requirements are met, including the payment of customs duties.
Beyond its global ecommerce presence, eBay has placed its bets on Indian ecommerce players such as Flipkart and Snapdeal, which may bring further value to Paytm Mall’s plans to stand its ground again.
Paytm Mall had decided to narrow its focus to a wholesale platform with O2O local commerce becoming the core business, instead of a consumer facing ecommerce site. The company expects to generate a bulk of its sales from O2O, 15% from wholesale and 35% from warehouse items. Paytm Mall expects to hit $2 Bn in gross merchandise sales this year, according to Sharma. Further, the company is also hiring 600 people to expand its O2O footprint.
According to Google India Research, India is expected to generate $100 Bn online retail revenue by 2021. Further, IBEF expects the Indian ecommerce market to grow to $200 Bn by 2026 from $38.5 Bn as of 2017.