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Paytm taps existing investors to raise USD 2 Bn

Paytm’s valuation rose to USD 10 billion when Warren Buffett’s Berkshire Hathaway invested USD 300 million in August, last year

Mar 28, 2019 by The Passage Team
Paytm taps existing investors to raise USD 2 Bn

Paytm is looking to raise up to USD 2 billion in a fresh round from existing investors, SoftBank Vision Fund and Ant Financial, that operates Alipay. The new infusion will put the Alibaba-backed payments company’s valuation at around USD 16-18 billion, an Economic Times report said, citing sources.

The news comes at a time when Paytm Mall is also in talks with online marketplace eBay to raise USD 150-200 million, at a lower valuation.

Paytm’s valuation rose to USD 10 billion when Warren Buffett’s Berkshire Hathaway invested USD 300 million in August, last year. Industry insiders said the valuation shot up to USD 16 billion in a recent secondary round (where existing investors sell their shares to new ones), the report stated.

Chinese tech giant Alibaba has 38% stake in One97 Communications, Paytm’s parent company, while SoftBank has about 19%. A report by Times of India said Paytm has already got commitments of USD 800 million to USD 1 billion from SoftBank’s Vision Fund and Ant Financial.

The development comes at a time when PhonePe is poised to become an independent entity authorised to raise external funds. The Flipkart-owned company is reportedly looking to raise up to USD 1 billion from Tencent, Flipkart co-founder Binny Bansal and a few bulge-bracket private equity funds.

The competition in Indian payments space has intensified with global tech giants including Google and WhatsApp eying a larger share of rapidly growing peer-to-peer and peer-to-merchant payments. India's digital payments industry is set to touch USD 1 trillion by 2023, according to research firm Credit Suisse.

The payment services are going after the 400 million smartphone users in the country. According to Counterpoint Research, India is likely to add 80-90 million smartphone users every year, and almost a billion smartphones will be sold over the next five years.

“The payments battle in India is a global one with deep-pocketed players in the fray and Paytm investors understand that if they don’t double down now they may lag behind. Currently Paytm has shown market leadership but the lead needs to be maintained, which is why the capital raise is important,” an investor in the company told ET, requesting anonymity.

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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