Alibaba to invest in Indian platform

Company looks to expand e-commerce business in emerging markets

China's largest e-commerce company Alibaba Group Holding may invest more than $500 million in an Indian start-up mobile commerce company, media reported over the weekend.

The deal, if finalized, is likely to boost Alibaba's presence in the emerging markets as part of its ambitious plan to expand its cross-border e-commerce this year, analysts said Sunday.

Alibaba and its financial service arm Zhejiang Ant Small and Micro Financial Services Group have agreed to invest about $575 million in India's Paytm, a mobile commerce unit of the country's leading e-commerce and online payments company One97 Communications Ltd, the Wall Street Journal (WSJ) reported Saturday, citing an unidentified source.

"We don't confirm speculation. Company is in process of raising money. We will communicate as and when we complete the process," Paytm said in an e-mail to the Global Times Sunday.

Alibaba declined to comment when reached by the Global Times Sunday. Temasek did not reply to Global Times' e-mailed query.

If the deal goes through, it could give Alibaba and its financial service unit a total of 30 percent stake in One97 Communications, the WSJ said.

In another report by New Delhi--based The Economic Times (ET) on Saturday, Paytm is in advanced talks to raise more than $500 million in funds with investors led by Alibaba and Singapore-based Temasek Holdings.

An announcement will be made at the end of the month and the deal may value Paytm at $1.5-1.9 billion, with at least two investors taking a combined 25-30 percent stake in Paytm, the ET said in the report, citing an unnamed source.

"The strategic focus for Alibaba in 2015 is expansion of cross--border e-commerce. In the developed markets where e-commerce is dominated by Amazon and eBay, emerging markets like Russia, Brazil and India are the target markets for Alibaba," Tang Jia, an industry analyst with Beijing-based market research firm Analysys International, told the Global Times on Sunday.

"It is also a good time for Alibaba to expand globally as its image has been considerably boosted by its IPO last year," Tang said.

Alibaba raised $25 billion in the world's largest-ever IPO in the New York Stock Exchange in September. The company is seeking to expand its cross-border e-commerce business to allow overseas retailers to sell to Chinese consumers through its marketplace and Chinese sellers to expand into markets beyond China.

During the November 11 Singles' Day sales promotion in 2014, Alibaba had flexed its muscle to extend its service beyond China, which helped it rake in record sales of $9.3 billion on the day.

In January 2014, Alibaba invested $15 million in 1stdibs, a New York-based marketplace for luxury goods, as part of the company's strategy to expand globally.

"E-commerce in developed markets is quite mature and will not be the first choice for Alibaba in its global expansion strategy," Wang Tingting, an analyst with iResearch, told the Global Times Sunday.

"Given the good economic prospects, the Indian market offers huge opportunities. Tapping the market also paves the way for Alibaba to expand into the Southeast Asian market," Wang said.

Revenue for India's e-commerce market will reach $6 billion in 2015, a 70 percent increase from $3.5 billion in 2014, data from research firm Gartner showed.

However, there are many challenges for Alibaba to succeed in the Indian market which is currently dominated by India's three largest e-commerce players Flipkart, Snapdeal and Amazon, which raised a total of $4.7 billion worth of funds in 2014.

Paytm, launched in 2011, currently has more than 20 million registered users and achieved a maximum of over 15 million orders per month, according to Paytm's website.

"Due to the political and cultural hurdles and like any other e-commerce company in a foreign market, Alibaba may not be able to easily crack the Indian market on its own. That's why it chose to invest in a local e-commerce platform," Wang said.

"It is too early to speculate whether it can replicate its success in China to India," Tang said.