Paytm's valuation to reach $10bn after secondary-share sale

Business

28 Jan 2018

Paytm to become a $10bn start-up after secondary share sale

The valuation of home-grown digital payments giant Paytm, owned by Noida-based One97 Communications, is likely to jump to $10bn after some existing and former employees sell a part of their shares to new investors, including Canada-based Discovery Capital. Information about other investors isn't available yet.

After the secondary share sale worth $50-70mn Paytm would become India's second-most-valuable Internet start-up, behind Flipkart.

Here's more.

Spike in Valuation

A rise of 43% in Paytm's valuation expected

A rise of 43% in Paytm's valuation expected

After the secondary share sale, which would happen over the next few weeks, Paytm is expected to see a 43% rise in its valuation to $10bn from its last publicly-reported valuation.

The company was valued at over $7bn in May last year when it raised $1.4bn from Japan's SoftBank Group. Other Paytm investors include Alibaba Holding, Ant Financial Services Group, and SAIF Partners.

Paytm, Flipkart

Paytm set to cement place as second most valuable start-up

A valuation of $10bn would help the Vijay Shekhar Sharma-led Paytm to firmly strengthen its position as the second-most valuable Indian Internet start-up after Flipkart.

The Bengaluru-based e-commerce giant was earlier valued at $12.6bn.

However, Flipkart's valuation has reportedly fluctuated after Apr'17 when it raised $1.4bn from Tencent, eBay, and Microsoft, following which it was valued at $11.6bn.

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Demonetization beneficiary

Paytm saw huge user growth after demonetization in Nov'16

Paytm saw huge user growth after demonetization in Nov'16

Paytm, as a digital payments platform, witnessed a massive growth in cashless payments after the Centre announced the demonetization drive in Nov'16, wiping out 86% of the currency in circulation.

Over the last 12-14 months, Paytm has diversified its business from online mobile recharge and digital wallet service to a full-fledged digital payments player.

It is among the few biggest beneficiaries of demonetization.

Services

Paytm launched various services over the last year

Paytm expanded its portfolio of services over the past year. It launched an e-commerce arm Paytm Mall in Feb'17 and began banking operations with Paytm Payments Bank in May.

Later, it rolled out several features like BHIM UPI payments on the app, Paytm Inbox (in-app messaging feature), digital and physical debit cards, investment arm Paytm Money, and "Paytm For Business" app for merchants.

Paytm to invest Rs. 5,000cr in payments business

In Sep'17, it was reported that Paytm was in discussions to raise Rs. 3,000-4,000cr ($456-608mn) in fresh funding. Later in November, the company said that it would spend nearly Rs. 5,000cr ($769mn) on boosting its payments services in the next three years.

Plans

Paytm to focus on machine learning, VR, and AR

Paytm to focus on machine learning, VR, and AR

Expanding the payments bank business is one of Paytm's priorities this year. In Oct'17, Paytm Payments Bank MD-CEO Renu Satti said $500mn would be spent on KYC compliance.

Paytm Founder-Chairman Vijay Shekhar Sharma said Paytm could enter hyperlocal logistics, cloud services, and launch a start-up incubator. It would focus on education, financial inclusion, and emerging technologies like machine learning, Virtual Reality, and Augmented Reality.

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