India-based e-commerce firm One97 Communications has formed a new entity with a view to spinning out its Alibaba and Intel-backed online payment platform Paytm, LiveMint reported on Wednesday.
Founded in 2000, One97 initially operated as an e-commerce platform and still runs an extensive mobile commerce and services operation.
Paytm was formed in 2010 as a payment mobile services provider and has expanded rapidly since, gaining a banking license from Indian regulators in 2015. It aims to launch the bank in October this year.
The digital commerce side of the business will be transferred to the newly formed entity, Paytm E-Commerce Pvt. Ltd, three people close to the development told LiveMint.
One97 founder Vijay Shekhar Sharma is the vehicle’s majority shareholder, according to regulatory documents, but its shareholding structure will mirror its parent company’s once the transfer has been completed.
One97 raised more than $30m up to 2011 from Intel Capital, the corporate venturing unit of Intel, venture capital firm SAIF Partners, Silicon Valley Bank and SAP Partners, the VC firm spun out of enterprise software producer SAP which is now known as Sapphire Partners.
SAIF added another $60m in 2014 before Ant Financial, the financial services affiliate of e-commerce firm Alibaba, paid a reported $575m for a 25% stake in One97 in February 2015.
Alibaba and Ant Financial reportedly invested $680m in the company in a September deal that included a $375m tranche from the previous funding and which resulted in Alibaba and Ant Financial each owning a 20% stake.
One of the sources told LiveMint: “Paytm has already started talking to existing investors, including Alibaba Group, to infuse fresh capital in the new entity.”
The report did not mention the status of One97 Mobility Fund, the $100m corporate venturing fund formed by One97 in 2010.