The money will be raised in a separate company called Paytm Ecommerce Pvt Ltd and the deal will be finalised in the next few weeks
Alibaba-backed Paytm is set to raise over Rs 1,000 crore in the first round of funding for its e-commerce business.
The money will be raised in a separate company called Paytm Ecommerce Pvt Ltd (PEPL) and the deal will be finalised in the next few weeks.
Vijay Shekhar Sharma, founder and CEO, Paytm, told DNA Money it will be the largest funding round for any e-commerce business in the country so far.
"We will raise money in our e-marketplace business. This is not a small cheque but a very sizeable investment. We are in the very advanced stage of closing the first round of funding in the e-commerce vertical. I can't say who is investing and how much but the deal is due for an announcement," Sharma said on the sidelines of Retail Leadership Summit 2017 organised by the Retail Association of India.
On what worked for Paytm considering the overall depressed fund-raising market scenario, Sharma said the company has a very different kind of investor base wherein the bet is far more long-term as compared to investment approach by traditional investors.
"We also have had the opportunity of learning from the Alibaba model and things that exist in China. So our investors have been very enthusiastic about it," said Sharma, adding that deal is being finalised and will soon be made public.
The e-marketplace is currently clocking transactions of under Rs 1,000 crore a month and is targeting raising the number of merchants and active merchants on its platform against the gross merchandise value (GMV) approach of its peers. The platform currently has 4 million merchants and the target is to reach 10 million by end of 2017.
As for the possibility of Alibaba entering the Indian market through Paytm, Sharma said, "That I can't say because they are just a large individual shareholder in the company. They do not close their doors but we don't get to discuss their plans. This means Alibaba's plans are Alibaba's and we are building the e-commerce business as a separate entity and raising money in it. Any which way, Alibaba has been a large shareholder and none of the shareholders will have over 50% for sure even after this round of funding."
On market talk about a possible merger between Paytm and Snapdeal, which will then pave way for Alibaba's entry into India, Sharma said, "This is not the kind of discussions and we have said that we are not interested (in merger and acquisition) because we are building the business on our own."
In terms of business break-even, Sharma said, "We had an operating contribution positive business, which basically means that if goods are being purchased for say Rs 100, these are being sold at less than Rs 100. But we are still investing significantly in people and technology. So a lot of hiring is being done for the banking, e-commerce, and payments business while also recruiting recruiters because there is so much hiring to be done across our businesses."
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