SoftBank Invests $1.4 billion in India's Paytm

SoftBank Invests $1.4 billion in India's Paytm

The company was valued at $6 billion in March when Paytm's existing investors Reliance Capital, SVB and SAP ventures sold their stakes of about 4.3% to Alibaba Group & Ant Financial Services Group.

With this one-time investment of Dollars 1.4 billion, SoftBank will hold a 20 percent direct stake in Paytm, along with a 12 percent indirect holding through its majority stake in Alibaba, the Chinese internet giant that has 40 percent stake in One97, Paytm's parent company.

Japanese conglomerate SoftBank has pumped $1.4 billion (over Rs 9,079 crore) into One97 Communications Ltd, an entity that operates the mobile payments and e-commerce platform under the Paytm brand. While both the companies have declined to comment on the valuation, market watchers say that the deal values Paytm at about $8 billion. The funding will help Paytm expand its payments bank operations as well as grow its user base and introduce more financial products for consumers.

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. "As a part of this vision, the company will soon launch 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", the company statement said.

The fund infusion in Paytm comes at a time when SoftBank is working on a sale plan of e-commerce firm Snapdeal.

The company further added: "We have been going from strength to strength in our payments division. We believe we have a great opportunity to bring financial inclusion to half a billion Indians", Sharma said in a statement.

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.

In addition, Paytm witnessed an uptake in its movie ticketing and travel booking (rail, bus and flight tickets) businesses. Paytm has recently collaborated with MMTC-PAMP to launch digital gold on its platform.

Paytm will launch its Payments Bank Operation from May 23. One of the biggest gainers of that demonetization was a start-up called Paytm, who via persistent advertising were already gaining popularity as a cashless app or mobile wallet in the Indian market.

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