Alibaba-backed Paytm gets SEBI nod for broking

Our Bureau Mumbai | Updated on April 02, 2019 Published on April 02, 2019

Alibaba-backed Paytm has now received an approval from market regulator SEBI to become a stock broker. Paytm will be the first brokerage house in India to be backed by a Chinese company, the regulatory officials told BusinessLine.

Additionally, Paytm Money has also signed a partnership with the BSE and the NSE. In an official blog, the company wrote, “We will be introducing new capabilities and offerings on our platform, such as trading in equities & cash segments, derivatives, and exchange-traded products.”

Paytm Money currently offers its users mutual fund investments. The company claims to have 30 crore registered users for its wallet or money transfer service. It may offer trading in shares mainly through mobile app, sources said.

Japanese investment firm Softbank and Chinese giant Alibaba are major investors in Paytm, with 19 per cent and 38 per cent stakes, respectively. Reportedly, One97 Communications, the parent company of Paytm, is planning its next round of funding for $2 billion which will take the company’s valuation to $18 billion.

In March 2015, Paytm received funding from Chinese e-commerce company Alibaba Group based in Hangzhou, China, after Ant Financial Services Group, an Alibaba Group affiliate, took 25 per cent stake in One97 as part of a strategic agreement. In May 2017, Paytm received its biggest round of funding by a single investor — SoftBank, which also has a large stake in Alibaba, thus bringing the company’s valuation to an estimated $10 billion.

In August 2018, Berkshire Hathaway invested $356 million for 3-4 per cent stake in Paytm, although Berkshire Hathaway confirmed that Warren Buffett was not involved in the transaction. The commission pool brokerage industry has shrunk to around ₹5,000 crore annually and Paytm’s entry could lead to further disruption.

Published on April 02, 2019

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