The global fight for digital assets in India

The global fight for digital assets in India - see also Indian e-commerce has a few owners

Global tech giants are heading for a proxy war in India. Alibaba is leading a $200 million investment into Paytm's marketplace, creating a new Indian unicorn, reports Times of India. It confirms the intention of the Chinese behemoth to take on Amazon, which is aggressively ramping up, investing $5 billion into its local operation as other homegrown rivals flail. Only one of the tech big boys will emerge victorious. The $255 billion Chinese group and Paytm have already invested together to build a dominant mobile-wallet payment business, now worth around $5 billion. Their smaller e-commerce unit is now being separated out to meet Indian regulations. 

After the latest fundraising, Jack Ma's Alibaba and its own payments affiliate Ant Financial will effectively control the e-commerce company and continue to own a large stake in the payments arm, which must be majority Indian-owned. Local rivals Flipkart and Snapdeal, backed by New York investment firm Tiger Global and Japan's SoftBank, respectively, helped to establish the domestic e-commerce industry. But their future roles look uncertain as these global tech giants, with deeper pockets, get stuck into the market. Privately owned Flipkart is fighting hard to maintain a narrow lead; investors now reckon it is worth as little as one third of its $15 billion peak in 2015. Meanwhile, the founders of Snapdeal are cutting costs and headcount; an email to employees admits errors in executing its strategy. 

Talk of a possible merger between Snapdeal and Paytm keeps surfacing in local media. That makes sense, given SoftBank already owns a near 30 percent stake in Alibaba and could lose a fortune fighting head-to-head to build market share. For now, Indian e-commerce has become a free-for-all, and a stark contrast to China where foreign companies have struggled. But there isn't room for everyone to financially succeed. Alibaba's new commitment to Paytm E-commerce, following its success in building out a local mobile wallet business, puts it in a strong position. Fold in Snapdeal, and Amazon's Jeff Bezos would face a significant obstacle in the road to global domination.

SAIF China's Alibaba Group and venture capital fund SAIF Partners have invested $200 million into the e-commerce unit of India's Paytm, the company confirmed on March 3. The investment gives the newly independent Paytm E-Commerce a valuation of about $1 billion, according to people familiar with the company. In December, Paytm announced that it was splitting its e-commerce business from its mobile-wallet payments business. Alibaba and its financial-payments affiliate Ant Financial owned about 40 percent of Paytm owner One97 Communications after investing more than $500 million in several rounds in 2015. The Chinese duo now effectively controls the e-commerce business, and continues to own a large stake in the payments business, which is 51 percent controlled by Vijay Shekhar Sharma, the founder and chief executive of One97.

SJP @DigitalAsian - ShareYaar


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