Indian payment firm Paytm raises $1.4bn from SoftBank

Jay Anderson
May 20, 2017

Japanese conglomerate SoftBank (9984.JP) invested USD1.4 billion in the parent company of Indian electronic payments platform Paytm. "We believe we have a great opportunity to bring financial inclusion to half-a-billion Indians", Paytm Founder & CEO Vijay Shekhar Sharma said in a statement.

Alibaba was the largest shareholder in the Paytm with 20 per cent stake besides One97 Communication Ltd, which is the parent company of Paytm.

SoftBank's investment values Paytm at about $7bn as reported by several Indian media publications.

This $1.4 billion deal includes $400 million worth of shares that SoftBank will buy largely from Paytm's early investor SAIF Partners in a secondary transaction and a minor stake from founder Vijay Shekhar Sharma.

"We are at an inflection point in our journey with Paytm".

This is one of the biggest funding ever garnered by an Indian e-commerce firm and will help SoftBank to maintain its bellwether status of being the lead investor in the country. We will aggressively move in areas such as lending, financial products, among others as we aim to offer financial inclusion to half a billion people.

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Paytm announced in February that it has now has over 200 million users of its mobile wallet, which is a popular payment method in India.

Investors like Softbank are betting big on Paytm as they expect to re-write the Alipay success story in China here in India.

The company said that it would introduce the Paytm Payments Bank, a mobile-first product that will reach every corner of the nation, and focus on the millions of unserved and under-served Indians.

Paytm's zero cost QR Code-based payment solution has been adopted by millions of merchants and has become synonymous to digital payments in India.

Paytm has 220 million users in Asia's third-biggest economy and plans to spend USD1.5 billion over the next three to five years on expanding its services. The company had to write off a significant portion of that after the devaluation of those investments.

One97 Communications had raised $60 million in August past year from Taiwan's Mediatek at a valuation of around $4.8 billion. It has pumped close to $2 billion into Indian startups like Snapdeal, Ola and in last few years. Acronym for "Pay Through Mobile", it was launched in August 2010 as an online recharges and bill payments platform and soon expanded into ubiquitous online and offline use-cases.

Other reports by BadHub

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