Softbank may invest $3 billion in Paytm Mall

Japanese internet behemoth Softbank is in discussions to pour in around $3 billion in Paytm Mall.

But it can only do so once it  gets free from Flipkart clause that restricts it from investing more than $500 million until 2020, said an ET report quoting sources.

Earlier in April, Softbank had pumped in $400 million, while about $45 million came from Alibaba. The Jack Ma-led group owns a majority stake in the e-commerce marketplace.

After this round, SoftBank is slated to have a controlling stake.

Alibaba and Ant Financial together held about 55 per cent 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 One97communication’s early backer SAIF Partners.

Since then Softbank held talks to invest $3 billion in the firm, the report added.

But the talks with Paytm Mall would proceed only if SoftBank make exit from Flipkart. At present, 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 per cent stake in Flipkart.

In last few years, the face of Indian e-commerce has undergone a massive shift since SoftBank and Alibaba have begun investing in the growing Internet economy.

SoftBank had alone pumped in over $5 billion in four companies including Paytm, Oyo, Flipkart, and Ola.

Flipkart had alone raised $2.5 billion round in August last year. 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.

Last week, the US retail giant Walmart bought 77 per cent stake in Flipkart for about $16 billion. This has turned Indian e-commerce battle into three-way involving Walmart, Amazon and Alibaba, which is backed by the Japanese conglomerate.

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 is targeting an ambitious $10 billion in annualised GMV by the end of this fiscal year.