Paytm Mall’s valuation crashes 99%; Alibaba, Ant Financial exit

Alibaba and the Ant Group have exited Paytm E-commerce (PEPL) Pvt. Ltd, the parent company of Paytm Mall, as the company pivots to the Open Network for Digital Commerce (ONDC) framework in a bid to widen business opportunities. With the exit of the marquee investors, the valuation of Paytm Mall plunged 99% to a mere $13 million from its peak valuation of $3 billion in 2020. It is understood that as part of the restructuring, Paytm E-commerce will undertake a capital reduction process.

“As part of the shift in the business direction of the company, PEPL also sees the exit of early investors Alibaba and Ant Group. Paytm Mall is confident of its new strategy and roadmap with the continuing support of other existing shareholders,” the company said in a statement.

Alibaba held about 28.34% stake in the firm while Ant Financial had a 14.98% stake in the company. As per report, Paytm E-commerce has acquired the total stake of Alibaba and Ant Financial, for a little over ₹40 crore valuing the company at about ₹100 crore from its peak valuation of $3 billion garnered during its last fundraise in 2020.

Paytm Mall has refuted the claims. "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. As part of the shift in the business direction of the company, PEPL also saw the exit of early investors. The exit price of any investor(s) in the company via capital reduction process is not reflective of the valuation of the company and neither does the exit have any link to any FDI laws. One simple metric is to consider that our cash balance itself is significantly higher than the quoted number in media reports, which establishes that the suggested low Fair Market Valuation is completely inaccurate,” a Paytm Mall spokesperson said.

Paytm Mall said that it will pivot to ONDC as its primary focus and explore opportunities in exports business in place of traditional physical goods e-commerce. “This move enables the company to create a long-term sustainable business in partnership with ONDC, which aims to democratise the purchase and sale of goods in the Indian market, driving transparency and digital independence for small businesses in the country,” the company said.

ONDC is a network based on open protocol that aims to facilitate business across segments. The idea is to check digital monopolies and enable small and medium businesses to get onto the fold of e-commerce.

Paytm Mall said that the publicly listed One 97 Communications Limited has no direct or indirect shareholding in Paytm Mall’s parent entity (PEPL). PEPL is not a part of the OCL group, though PEPL uses the Paytm brand and receives services from OCL.