Business

Paytm raises $1.4 billion from SoftBank

18 May 2017 | By Gaurav Jeyaraman
Paytm finally breaks the jinx for SoftBank

Paytm is said to have raised over $1.4 billion from Japanese investor SoftBank, in one of its largest funding rounds from a single investor.

Paytm has now become SoftBank's largest investment in India, and SoftBank seeks to replicate the success Alipay had in China, through Paytm in India.

Paytm said it plans to invest $1.6 billion in 3-4 years to increase banking-access for Indians.

In context: Paytm finally breaks the jinx for SoftBank

18 May 2017Paytm raises $1.4 billion from SoftBank

DealAll about the deal at hand

SoftBank would get 20% of Paytm in lieu of investment made. It will be the largest single round funding received by an Indian digital commerce firm.

SoftBank also owns 28% stake in Alibaba, one of the earliest backers of Paytm, whose stakes in the firm after the recent investment stands at 62% from 40% that it held earlier.

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A staggering $9 billion valuation

ValuationA staggering $9 billion valuation

In the last funding round, Paytm raised Rs. 400 crore from Taiwanese chip designer MediaTek, while being valued at about $4.8 billion.

In this round if it happens, Vijay Shekhar Sharma-led digital wallet firm has been valued at $9 billion by SoftBank.

Such a high valuation may still be fruitful as Paytm's growth trajectory spearheaded by India's demonetization drive has not slowed down.

VenturesPaytm is making bold moves

The online payments provider recently ventured into the wealth management space by allowing its users to buy, sell gold digitally.

Paytm has also introduced Food Wallet aimed at organizations, that provide meal vouchers to their employees.

It also has Paytm Mall, its own take on the e-commerce space, which is going to give stiff competition to the likes of Amazon, Flipkart in the future.

Future plansFuture plans in the Paytm pipeline

Paytm's CEO plans to put-in Rs. 10,000 crore over the next three years for business expansion.

The digital wallet firm has RBI approval to set up a payments banks unit, which it would roll out on 2rd May.

The firm has ambitious offshore expansion plans and has already established itself in Canada and thanks to this funding, it may reach out in other countries.

ObstaclesSoftBank has got some cleaning up to do

SoftBank needs to get its India portfolio in order.

It has to get rid of the debt-ridden Snapdeal to Flipkart or any other willing entity it may be considering.

It should perhaps do a reality-check on whether injecting more funds in its defunct investments makes sense.

It should also look for new investment opportunities in India in order to compensate for its earlier failures.