China's AliPay to pick 25% stake in One97

Ant Financial Services Group, China's leading online financial services company that owns AliPay, is all set to acquire 25 per cent stake in Noida-headquartered mobile internet firm One97 Communications Ltd. The financials of the deal are not disclosed.

Ant Financial, an affiliate of China's Alibaba Group Holding Ltd, will provide One97's m-com and virtual wallet property Paytm with strategic and technical support for its business, following the deal. The companies will also build on synergies in the mobile wallet front.

This deal also marks Ant Financial's entry into the Indian market.

"With over 1 billion people, India's payments market has vast untapped potential. As smartphone use continues to rise in the country, we see great opportunity in the mobile wallet space. Paytm is best equipped to build a mobile payments ecosystem in the country," said Cyril Han, VP, Ant Financial, in a statement.

"Ant Financial will help us greatly enhance our customer proposition," added Vijay Shekhar Sharma, co-founder and CEO of One97.

Last month, Techcircle.in had reported that One97 is raising $575 million from the world's largest e-com firm Alibaba and the group's separate payment unit Alipay. This was in addition to $60 million more from existing lead investor SAIF Partners.

One97 had zeroed in on Alibaba Group as the new investor after negotiating with various possible suitors including Singapore's state-owned investment firm Temasek among others. It had signed a term-sheet for investment with Temasek as first reported by Techcircle.in but decided to go ahead with a deal with Alibaba.

Citi and Goldman Sachs were the financial advisors for the deal. Simpson Thacher & Bartlett LLP; Trilegal; and Amarchand & Mangaldas & Suresh A. Shroff & Co acted as the legal advisors; while KPMG was the diligence advisor.

Founded in 2000, One97 Communications is a leading mobile-internet company in India that offers digital goods & services to its mobile consumers under the Paytm brand. It also provides mobile advertising, marketing and payments for merchants. In addition, it has a partnership with existing lead investor SAIF Partners where it invests in early stage mobile internet startups through One97 Mobility Fund.

The company had previously raised funding from SAIF Partners, Intel Capital and Silicon Valley Bank, having raised around $30 million spread over three-four rounds.

It first raised Rs 26 crore (around $6 million then) in March 2007 from SAIF and SVB. It got Rs 10 crore ($2.5 million) more from the same investors at the end of the same year through convertible securities. A year later, it scooped just under Rs 50 crore ($10 million) from Intel Capital and SVB.

One97 had also filed to go public, where it sought to raise Rs 120 crore. It had received a go-ahead from the market regulator SEBI and had originally planned to list by December 2010. But it had decided to shelve the proposed domestic IPO plan and decided to rope in a new private investor.

At that time it raised $10 million in its third round of funding from SAP Ventures in 2011, the corporate venture capital arm of German software giant SAP. The company's valuation during this round was nearly $300 million.

It also counted small shareholders like IDFC, Reliance Capital besides individual investors such as Nikhil Vora.

SAIF Partners had bought out the stake held by Intel Capital and IDFC for an undisclosed amount thereby increasing its holding to around 50 per cent.

A leader in the online payment and financial services space in China, Ant Financial Services Group is focused on serving small and micro enterprises and consumers. According to the company, its mobile payment app Alipay Wallet has over 190 million users.

(Edited by Joby Puthuparampil Johnson)