Paytm may join forces with Alibaba to invest US $200 mn in BigBasket

Digital payments major Paytm may join forces with its investor Alibaba to pick up a minority stake in online grocery retailer BigBasket for about US $200 million, according to sources close to PTI.
According to a PTI report: The companies are holding preliminary talks and may take a call on the matter in the next few weeks, sources privy to the development said.
When contacted by PTI, Paytm declined to comment, while BigBasket did not respond to emailed queries.
Alibaba spokesperson told PTI that the company doesn’t comment on market speculation.
Investing in BigBasket would help Paytm in further strengthening its play in the e-commerce space. For Alibaba, it would add more muscle to take on US-based rival Amazon.
One of the persons familiar with the development said BigBasket is looking at raising money to fund its expansion plans, reported PTI.
BigBasket has raised over US $200 million from investors including Abraaj Group, Bessemer Venture Partners, Growthstory, Helion Venture Partners, IFC and Sands Capital.
With people becoming comfortable buying even milk and bread online, online grocery segment is projected to witness a strong growth over the next few years.
Industry watchers believe that grocery would become bigger than electronics and fashion, categories that currently dominate online purchases.
Grocery delivery is a cash-intensive business as players operate on wafer-thin margins and often end up losing money on delivery. Players like Snapdeal-backed PepperTap has already shut shop.
However, the action is set to return with Amazon US $500 million FDI proposal getting approved.