Paytm mall’s out of the unicorn club; valuation plummets 99.5%

Paytm Mall is buying back 43.2% shares held by Alibaba and Ant Financials for INR 42 Cr. The exit of the early investors has plummeted the valuation of Paytm Mall by 99% to a mere $13 Mn.

Paytm Mall, managed by Vijay Shekhar Sharma and valued at over $3 billion in its recent investment round, has lost its early investors Alibaba and Ant Group. The news comes as the firm prepares to explore export business potential through the country’s Open Network for Digital Commerce (ONDC) Network.

According to the notification, shareholders will vote on a special resolution to lower the company’s share capital. By cancelling and extinguishing the shares held by Alibaba and Ant Financial, the firm would reduce its share capital from 21.27 lakh equity shares to 12.06 lakh shares of Rs 10 apiece.

According to the settlement, Alibaba will depart with over $3.5 million, while Ant Group will exit with over $1.8 million, and both will write off their interests. Paytm Mall will repay these investors at Rs 459 per share, valuing the firm at around $13 million.  This marks a whopping 99.5% haircut in its valuation as compared to its peak when the company was valued at $3 billion after eBay led a $160 million round in July 2019.

According to sources, which cites filings of Paytm E-Commerce, the firm that owns Paytm Mall, the marketplace has purchased the whole holdings of Alibaba’s 28.34 percent and Antfin (Netherlands) Holdings’ (14.98 percent) for INR 42 Cr.

With this exit, the startup’s worth has dropped by over 99 percent to a meager $12.8 million (INR 100 Cr).Paytm Mall, a B2C ecommerce platform, achieved unicorn status in 2018 after raising $445 million in an investment round sponsored by SoftBank and Alibaba. This financing boosted the startup’s valuation from $1.6 billion to $2 billion.

Later in 2019, large ecommerce operator Ebay acquired a 5.5 percent interest in Paytm Mall for about $150 million to $200 million at a $3 billion value.Paytm Mall claims that the switch to ONDC would help them build a long-term sustainable company while democratising the buying and sale of items in the Indian market. Paytm Mall’s participation follows the selection of 24 ecommerce and hyperlocal delivery businesses for ONDC’s trial phase. Among those that participated were Flipkart, Dunzo, and PhonePe.

The Indian government stated that it wants to strengthen the process, which is expected to take six months, before formally starting the ONDC initiative.

Union Minister Piyush Goyal, Department for Promotion of Industry and Internal Trade (DPIIT), is leading the project, which is supported by major institutions such as State Bank of India, Axis Bank, HDFC Bank, and Kotak Mahindra.

SBI purchased a 7.84 percent interest in ONDC earlier this year for INR 10 Cr. Other banks, including Axis Bank and Kotak Mahindra, own shares worth INR 10 Cr.