Alibaba Group on Monday announced its first formal joint venture with mobile wallet company Paytm, to set up an online gaming company.
The latter would hold 55 per cent stake. The rest would be Alibaba’s Hong Kong-based private company, AGTech Media. Till now, Alibaba has invested in Paytm to the tune of a billion dollars.
Alibaba Group called it the ‘first significant strategic international expansion’. With an initial investment of $8.8 million (Rs 56 crore), Paytm has got into the online gaming and content business with AGTech Media. The Hong Kong-based company would be investing $7.2 mn. For the JV, Paytm has set up a new company, Paytm Group, under Paytm Holding.
“The (Alibaba) Group believes this JV company will enable it to tap into the significant potential of the fast growing mobile entertainment market in the world’s second most populous country. Through this JV, the Group plans to create a high quality mobile entertainment experience for Paytm’s 225 million users in the India market,” went the listing at the Hong Kong stock exchange.
Ali Fortune Investment Holding Ltd, controlling shareholder of AGTech, was indirectly held by Alibaba Holding (60 per cent) and Ant Financial (40 per cent). In the filing, the Group said it believed this JV lays the foundation for further international expansion. “As the leading mobile payment platform in India, Paytm is the ideal local partner,” it added.
The filing says the JV would develop and operate platforms for users to participate and play in various games. Sources said the new entity, Paytm Group, would be based out of India and all the research and development of online gaming platforms would be done here.
While the Hong Kong-based company would bring technical know-how and a decade’s experience in creating mobile entertainment products, Paytm Group would leverage on the e-commerce company’s wide distribution network.
“The JV company shall be engaged in the development and operation of various platforms, including website, mobile applications or other distribution channel, to develop and publish a variety of products for Indian customers such as mobile games and other user engagement activities in India,” the filing said.
According to the deal, the JV entity would have a five-member board of directors, of which three shall be nominated by Paytm Group and two by AGTech Media. According to the filing, Paytm Holding is principally engaged in the business of providing digital goods and services, and electronic payment solutions.
Ant Financial Group holds a little more than 30 per cent shareholding in Paytm Holding. AGTech Media is a private company incorporated in Hong Kong, with limited liability, and is a wholly-owned subsidiary of the Group. The Group is an integrated technology and services provider, principally engaged in the lottery and mobile game and entertainment sector.
[Source”GSmerena”]