One97 Communications, the parent company of India’s leading digital payments platform Paytm, is reportedly a step away from closing a massive $1.9 billion funding round. Reports suggest that the deal has been agreed upon and is awaiting board approval.
In this fundraising round, only one investor is pouring in money — SoftBank Group. The reports suggest that none of the existing investors of the company, including Alibaba, is participating in this round.
The deal will value the Noida-based payments giant at around $9 billion. Also, SoftBank will get hold of around 20 percent stake in the company. This is a significant increase in its valuation. Earlier, when Paytm last raised funding from Taiwanese semiconductor maker MediaTek about eight months ago, it was valued at $4.8 billion.
The majority of capital raised in this round, almost $1 billion, will be used by Paytm to expand its payments business to high growth areas such as money lending and insurance cover. It will also invest a chunk of the investment for expansion of its offline payment network, for which, the company is awaiting final regulatory approval. It has recently also shelled out ₹600 crore to expand its QR code platform to a larger set of merchants.
We earlier reported that Paytm was looking to raise over $1.5 billion in a new fundraising round from Japan’s SoftBank, at a pre-money valuation ranging between $7-8 billion.
The news about this massive funding round for Paytm comes on the heels of the announcement of a $1.4-billion funding round for India’s largest online retailer Flipkart. The round saw participation from Tencent, Microsoft, and eBay. This funding round valued the Bengaluru-based company at $11.6 billion.
SoftBank Group has invested more than $2 billion in several Indian startups, including Ola, Snapdeal, Oyo and Grofers. The VC firm is reportedly pushing for the sale of Snapdeal to Flipkart, and to further invest in Flipkart for a significant stake in the company.
This new funding for Paytm also comes at a time when the company is facing a tough competition from the likes of MobiKwik and Flipkart’s PhonePe. Even the Indian government is pushing for a digital economy through its own services – BHIM and Aadhar Pay.
As if that was not enough, WhatsApp is also gearing up to introduce peer-to-peer payments service on the platform in the coming months (and Trucaller has already integrated UPI into its dialer platform). With more than 200 million users in India, WhatsApp could be the biggest threat to Paytm — as it will further ease the payment transfer process.