Alibaba and Ant Group pulled out of investments in Indian e-commerce platform Paytm Mall

Two of Indian e-commerce platform Paytm Mall’s early investor, Alibaba and Ant Group, have exited the company, The Economic Times reported.

At a price that valued the company at $13.5 million, Alibaba sold a 28.34% stake and its fintech subsidiary Ant sold another 14.98%. That’s a significant drop from its 2020 valuation of $3 billion. In total, they sold a 43.32% stake to Paytm E-commerce, the parent company of Paytm Mall, for Rs 42 crore ($5.3 million).

The company, which was inspired by Alibaba’s Tmall marketplace, raised $200 million from the Chinese e-commerce giant in 2017. Alibaba and Ant have since continued to inject money in the company to raise their bets on the populous South Asian market.

The sale comes after Paytm Mall’s decision to join the government-backed e-commerce platform Open Network for Digital Commerce (ONPC).

According to India Briefing, the ONDC is a neutral platform that will set protocols for cataloguing, vendor match, and price discovery on an open source-basis, like the Unified Payments Interface (UPI). Buyers and sellers can transact on ONDC irrespective of whether they are attached to any specific e-commerce portal. For instance, even if a seller X is registered on platform A, while the consumer is registered on platform B, the consumer can directly purchase products of seller X without registering on platform A from the ONDC.

The network, which is expected to launch in August 2022, aims to disrupt the dominance of big e-commerce players such as Walmart-owned Flipkart and Amazon in India.

In order to join ONPC, Paytm Mall reportedly had to undergo a restructuring, which will involve a capital reduction process and share cancellations. The company has also clarified that other early investors have also exited due to the revamped strategy.

“We are set to build on the revolutionary ONDC program by the Government of India to drive online commerce in India. We also plan to explore opportunities in the export market. We are grateful for the support of our investors and look forward to driving sustainable growth,” said a Paytm Mall spokesperson.

Despite the exit of Alibaba and Ant Group, Paytm Mall sounded optimist about its future prospects. “We are focused on our transition to build a sustainable business in partnership with ONDC and are excited about the future of e-commerce in India,” the company’s spokesperson said.