Alibaba-backed mobile payments and commerce company Paytm has readied a $500 million war chest as it scouts for acquisitions across the hyperlocal commerce space.

The company has $200 million in cash and the remaining $300million could be through equity. Further, the company has also set aside $50 million for investments in logistics and warehousing.

Paytm is quickly turning itself into a full-fledged e-commerce platform and is looking at the online-to-offline space as a major growth driver, in line with Alibaba’s beliefs.

“We want to get into local commerce, which we feel will become the biggest segment in the ecommerce space,” said Sharma.

Online food and grocery ordering services have been two of the hottest segments for investments in India over the past couple of months under the premise that O2O commerce will be huge in India.

The move will allow Alibaba to can gain a strong foothold on customers that shop from brick and mortar stores which still make up the largest part of the retail market in India.

While the online retail sector in India is expected to be worth anywhere between $120 billion and $200 billion dollars by 2020, the overall retail sector is expected to be worth $1.3 trillion in the same time.

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