Reliance Capital has sold its stake in One97 Communications—the parent company of digital payments provider Paytm - to China’s Alibaba in a deal estimated at Rs 275 crore according to one person aware of the details of the transaction, which will deliver a over 27-fold return on investment for the Anil Ambani-led financial services firm.Reliance Capital invested Rs 10 crore in 2010 for a 1.5%% stake in One97 in anticipation of a public listing of shares by the Paytm owner, a plan which was later dropped.
At that time, the shares of One97 were valued between Rs 200 to Rs 250, said the person cited above. After One97 raised additional capital, this stake got diluted to 0.83%.
“In the current sale, shares of Paytm have traded at over Rs 7,000 per unit,” the source told ET.
Reliance Capital had been in conversations with multiple buyers to sell its holding for over a month now. The company continues to be a shareholder in Paytm E-Commerce Pvt Ltd, the entity hived off by One97 in August 2016 to re-launch the online marketplace in association with investor Alibaba.
For Alibaba and its payment affiliate Ant Financial - which together own a 40% stake in One 97 Communication—this latest deal marks a consolidation of interest.
The Chinese conglomerate has just increased its stake in Paytm’s online retail unit by leading a $200 million funding round in Paytm E-commerce - valued at $1 billion—and demerged from parent One97 communications in February. The e-commerce portal will be fashioned after Alibaba’s digital platform in China called TMall.
One97 Communications - which is valued at $4.8 billion - did not comment on the current transaction. A representative for Reliance Capital also declined to comment on the development.
“In the current atmosphere, it will be difficult to get an exit at this scale for an early investor in an e-commerce business," said Pinakiranjan Mishra, partner and national leader, consumer products and retail at EY India.
"The question on timing of the exit depends on the risk appetite of the individual investor and its investment philosophy and is not driven by the market alone,” he said.
Paytm founder Vijay Shekhar Sharma sold 1% of his shareholding in the parent company One97 Communications in December for Rs 325 crore to raise money for Paytm’s payments bank, which will launch operations next month.
Reliance Capital owns stake in a number emerging businesses like wine maker Sula, reverse logistics player Greendust, semiconductor testing firm Tessolve and healthcare chain Wellspring.
It also invested Rs 38 crore in online travel agency Yatra, which was listed on NASDAQ through a reverse merger last year. Its 8.75% stake in Yatra is worth about Rs 175 crore.
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