Paytm Mall, the e-commerce entity of Paytm which aims to take on Amazon India and Flipkart, has reportedly started talks with investors to raise around ₹4,000 crore in a new funding round.
The funding round is expected to close by the end of this year. While the names of the investors are not known, it is said that the company is in talks with Asia and US-based investors.
The development was first reported by Economic Times based on two people aware of the matter. One of them said:
Paytm Mall is planning to close the new round of funding by end of this year and is talking to financial investors from Asia and the US.
Alibaba and its financial arm — Ant Financial Services, which holds a majority stake in the company, could also invest in the said funding round.
Paytm Mall has adopted aggressive growth strategy and has been spending a lot of money to grow its platform. It has ambitious growth targets as it hopes to strengthen its position in a market dominated by Flipkart and Amazon.
In order to accommodate its growth strategy, the company has transferred around 800 employees from its parent company to the eCommerce entity.
Ahead of the festive season sale, Paytm Mall spent ₹32 crore for on-boarding 50,000 new sellers on its platform. It also spent ₹224 crore to improve its logistics service along with offering same-day and one-day delivery.
The company had planned to spend over ₹1,000 crore on marketing and promotions of its festive season sale events during September and October. During the sale, it offered cashback of about ₹501 crore to customers.
With the new capital coming in, the company could close the acquisition deal of BigBasket — the online grocery delivery platform, which is now said to be in final stages.
Experts estimate that Paytm Mall may have doubled its market share during the sale period, compared with the previous year. Analysts believe that Paytm Mall’s O2O (online-to-offline) model gives them an edge in the industry.