India: Paytm E-commerce in early talks with Snapdeal for merger: report

Paytm says the average transaction value has increased by 200% and the number of mobile app downloads by 300%. Photo: Bloomberg

Electronics payments company and marketplace Paytm has had exploratory talks with Snapdeal last month on merging its e-commerce business with the latter in an all-stock transaction, as per a report in The Economic Times.

Further details on the talks held between the two parties could not be ascertained owing to confidentiality issues and non-disclosure commitments, the report said.

The talks may resume between the two, but it was not certain in the report whether the deal will go through or not.

However, if the deal goes through, the two biggest beneficiaries of the deal would be Chinese e-commerce giant Alibaba, which is an investor in both Paytm and Snapdeal with 40 per cent and three per cent share, respectively, and Japan’s Softbank, a major investor in Snapdeal and a substantial shareholder in Alibaba.

“Snapdeal and Paytm have held talks to merge and this deal is driven by Alibaba,” said the report quoting an unnamed source.

Paytm has separated its e-commerce business from its payments businesses by creating a new arm Paytm E-commerce Private Ltd, which is close to raising $180-200 million in an investment round led by Alibaba. The funding round will increase Alibaba and its affiliate Ant Financial’s stake in Paytm E-Commerce to more than 50%, Mint reported.

Paytm, the digital wallet owned by One97 Communications Ltd, will be part of Paytm Payments Bank Ltd. The firm has a deadline of March 31 to spin off its marketplace, as mandated by the Reserve Bank of India (RBI). RBI had issued an in-principle payments bank licence to Vijay Shekhar Sharma, founder of Paytm, last year.

Also Read: India: Paytm bank gets $32.4m in investments from founder, others

Paytm E-commerce in talks to raise up to $200m from Alibaba, others