When Rs. 10 Crore Investment In Paytm Returned Rs. 275 Crore

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The startup ecosystem in India has been growing leaps and bounds for the last five years, despite all challenges, criticism and corrections. It is proven once again as the poster boy of digital wallet revolution in India, Paytm, has helped Reliance Capital to pocket 275 crore (approx. US$350 million) aginst their investment of mere Rs. 10 crore ($1.35 million).

According to people familiar with the matter, Reliance Cap has sold its stakes in Paytm to Alibaba for Rs. 275 crore (US$350 million), with a whopping 27.5x returns. The financial investment arm of Reliance Group had invested Rs. 10 crore (approx US$1.35 million) in One97 Communication, the holding company of Paytm. The deal, however, doesn’t include Reliance stake in e-commerce arm of Paytm – Paytm Mall, which was awarded to Reliance by virtue of its investment in Paytm’s parent company.

Alibaba which has bought the 1% stake Reliance Capital bought has strengthened its control in Paytm further. The Chinese internet giant has been eyeing on all the Indian internet majors for a long time to have a sizable chunk of the Indian e-commerce pie. Recently, Alibaba had investment $177 million in the recently launched Paytm Mall valuing the e-commerce arm of Paytm at over $1 billion.

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Neither the Anil Ambani led Reliance Capital nor Paytm has commented on the development.

According to sources, Reliance Capital is monetising its stakes in all non-core businesses to inject more funds into selective industries and verticals. The industry analysts, however, believe that Reliance Capital is trying to leverage on the roaring valuation of Paytm due to demonetization drive. In late December last year – one month after the demonetization drive kicked off – Paytm founder Vijay Shekhar Sharma has sold 1% of its total stake in Paytm for Rs. 325 crore (US$48 million), valuing the company worth Rs 32,500 crore (US$4.8 billion).

Alibaba is reportedly holding 41% stake in Paytm’s holding company One97 Communication, led by Vijay Shekhar Sharma. Besides, Alibaba, SAIF Partners also holds a sizable chunk of equity in the company.

Via: CNBC Moneycontrol

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