eBay buys 5.6% of Paytm E-Commerce for $160 mn

The US-headquartered ecommerce firm eBay will invest $160 million (Rs 1,102.53 crore at the current exchange rate) for a 5.59% stake in Paytm E-Commerce, the entity that operates the consumer-facing ecommerce front Paytm Mall, according to the filings with the ministry of corporate affairs.

The investment will come via the Singapore-based associate entity eBay Singapore Services, the filings showed. The company will issue 128,028 equity shares at Rs 87,481 per share.

This would mean that the investment valued Paytm Mall anywhere between $2.86 billion-$3 billion (Rs 19713.34 crore - Rs 20,672.54 crore)

Email queries sent to Paytm seeking confirmation on the investment ticket size in this regard did not elicit a response at the time of filing this report.

It was reported less than a month back that eBay it will pick up a 5.5% in Paytm Mall. The investment size was not disclosed but media reports had pegged it anywhere between $150-$200 million. 

eBay’s investment in Paytm Mall is also accompanied by a commercial agreement where eBay will bring its global inventory into Paytm Mall’s ecommerce platform. 

The development comes amidst speculations that Paytm’s ecommerce division has been undergoing a crisis of relevance in an ecommerce market dominated by Walmart-owned Flipkart and Amazon. 

Media reports have also talked off a potential shutdown of Paytm Mall’s  B2C (business to consumer) operations while focusing more on B2B (business to business). Vijay Shekhar Sharma, founder and CEO, has denied any such moves.

Paytm Mall was launched in 2017. In April last year, TechCircle reported that Paytm Mall’s parent firm Paytm E-Commerce was raising $446 million (Rs 2,892.50 crore then) from Alibaba and SoftBank. In all, it has raised more than $600 million (not including the $150 million reported now) so far.

In addition, its biggest investors -- Chinese ecommerce giant Alibaba and Japanese investment behemoth SoftBank -- appear to have cooled down amid mounting losses, a phenomenon that has been attributed to the highly discount-driven and cashback-led ecommerce strategy of Paytm.

Paytm Mall’s losses mounted to Rs 1,787.5 crore for the financial year ended March 2018. Operating revenue, however, rose to Rs 744.1 crore in 2017-18.