Paytm Mall may raise up to $200 mn from eBay; OYO makes first acquisition in China

Paytm Mall may raise up to $200 mn from eBay; OYO makes first acquisition in China
Photo Credit: Photo Credit: VCCircle
27 Mar, 2019

Paytm Mall is in talks with global e-commerce firm eBay Inc. to raise up to $200 million (Rs 1,380 crore at current exchange rate), persons in the know told Entrackr. The deal, if it materialises, will see a significant reduction in Paytm Mall’s valuation, which could drop to as low as $600 million (Rs 4,141.6 crore at current exchange rate).

According to VCCircle estimates, the company was valued at $1.89 billion post-money when it raised around $446 million from Japanese Internet conglomerate SoftBank and existing investor Chinese e-commerce behemoth Alibaba in April last year.

Paytm Mall is pivoting from its consumer-facing business to wholesale and offline-to-online (O2O) segments, due to heightening competition and mounting losses, The Economic Times had recently reported. The shift in business focus coincides with a rejig of Paytm Mall’s top-level and mid-level executive teams.

Vijay Shekhar Sharma, founder of Paytm, had denied that the firm was considering exiting the consumer-facing business. Sharma, however, said that Paytm Mall will sharpen focus on the O2O model.

“Small shops and sellers have unprecedented opportunity to expand online. Our O2O technology suite and mall as consumer destination will give them necessary support to expand to new consumer base,” he said.

“Majority of our business is expected to come from our O2O (delivery from local store), 15% wholesale and 35% from warehoused items,” Sharma said, adding that the Mall platform will hit $2 billion in gross merchandise sales in 2019.

Paytm Mall's O2O strategy is inspired by that of Tmall, parented by Alibaba in China. Paytm is backed by SoftBank and Alibaba.

The shift in business focus coincides with a management rejig at Paytm Mall.

Sudhanshu Jain, who was chief financial officer (CFO) of Paytm’s Payments Bank vertical, has assumed charge as the financial comptroller of the online business.

Bharti Balakrishnan, senior director with Alibaba Group, has been onboarded to lead certain unstructured categories including fashion, home and kitchen.

Varun Gupta, vice-president at Paytm, now leads the groceries vertical of Paytm Mall. Srinivas Mothey, who joined Paytm in January 2018, is now the firm’s chief marketing officer.

Also, senior vice-presidents Saurabh Vashishtha and Amit Bagaria have quit Paytm Mall.

eBay had sold its holdings in Flipkart for about $1.1 billion after the Indian e-tailer was acquired by US retail giant Walmart. The online selling platform also ended its strategic relationship with Flipkart in the process and terminated the homegrown e-tailer's licence to use the eBay.in brand. The company later re-launched its Indian operations in a new avatar focusing on cross-border trade.

Separately, marking its first acquisition in China, homegrown budget hospitality chain OYO has bought mid-sized hotel brand Qianyu for an undisclosed sum, a media report said.

The acquisition will help OYO with its ambitious growth plans in China and will net local talent and expertise, Entrackr reported.

Qianyu follows a franchise model wherein it takes over the infrastructure of partner hotels, renovates and brings them under its brand and gathers bookings from online travel agents. The company has operations in many Chinese cities including Beijing, Shanghai, and Chengdu, and is backed by Xu Xiaoping’s Reality Fund, Gaochun Capital, Ali’s Yuanhao Capital, and Didi’s investor Wang Gang. The deal will see its investors exiting the company, the report said, citing people it didn’t identify.

OYO operates with a combination of franchised as well as manchised — a hybrid of franchise and management — properties in China.

OYO founder and chief executive officer Ritesh Agarwal recently claimed that the SoftBank-backed unicorn is the fourth-largest hospitality chain in China and the seventh-largest globally in terms of the number of properties on its network. He added that the company had identified China, Southeast Asia and the Middle East as its core overseas markets.  

According to a recent report by subscription-based digital media publication The Information, US-based online home rental company Airbnb is in talks to invest $100-200 million in OYO.

In February, OYO raised $100 million (Rs 709.4 crore) from Chinese ride-hailing firm Didi Chuxing to close its $1 billion investment round.

Prior to Didi Chuxing’s investment, OYO raised capital from Japanese conglomerate SoftBank, Singapore ride-hailing company Grab, investment firms Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital as part of the $1 billion funding round.