Reliance Capital pockets a 2650% return from One97 investment

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 . 275 crore according to one perat ` son aware of the details of the transaction, which will deliver an over 27-fold return on investment for the Anil Ambani-led financial services firm.

Reliance Capital invested ` . 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 ` . 250, sa . 200 to ` id 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 ` . 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 relaunch 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 ecommerce 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 Capi tal 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 ecommerce 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 2016 for . 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 `. 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 ` . 175 crore.