Softbank invests $1.4 billion in Paytm

Gladys Abbott
May 20, 2017

The latest funding is also likely to help Paytm grow its user base further and develop a suite of financial services products for its users.

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

This is Softbank's largest investment in a single company in India. He picked up a 0.35% stake or 1,60,000 shares of One97 Communications.

Flipkart - which is in talks to buy Snapdeal - had raised a similar amount last month, although from three investors Tencent, eBay and Microsoft.

SoftBank's investment values Paytm at about $7bn as reported by several Indian media publications. Softbank has pledged an investment of US$1.4 bn to gain 20% stake in the company, which now pushes the valuation of Paytm past US$7.0 bn, making it the second most valuable startup in the country, only behind Flipkart. "We believe we have a great opportunity to bring financial inclusion to half a billion Indians", said Vijay Shekhar Sharma, founder of Paytm.

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Paytm plans to invest Rs 10,000 crore (approximately $1.6 billion) over the next three-to-five years towards its commitment to enabling half-a-billion Indians to join the mainstream economy. Sharma informed that after this deal, Softbank will get a seat on the Paytm board.

Paytm on Wednesday said it will finally launch the operations of its payments bank on May 23.

Paytm founder Vijay Shekhar Sharma owned almost 21% of One97, while Alibaba held a 40% stake, according to latest regulatory documents accessed by business research platform "We have the largest base of users and merchants so we have to use our vast distribution network across consumers and merchants", Sharma said. The company had to write off a significant portion of that after the devaluation of those investments. While it has pumped in close to $2 billion into Indian start-ups like Snapdeal, Ola in last few years.

"In line with the Indian government's vision to promote digital inclusion, we are committed to transforming the lives of hundreds of millions of Indian consumers and merchants by providing them digital access to a broad array of financial services, including mobile payments", SoftBank Group Chairman and CEO Masayoshi Son said. Prior to this round, the payments firm, which started life as mobile value added service delivery platform in 2000, raised $60 million from Taiwan's Mediatek at a $4.8 billion valuation in August past year. Its present investors include Ant Financial (Alipay), Alibaba Group, SAIF Partners and Mediatek. The stake was sold to Chinese e-commerce giant Alibaba Group Holdings.

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