Calcutta, May 18: 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.
The latest round of funding is not only the biggest ever for Paytm's parent One97 Communications but also matches the amount raised by Flipkart last month. The funding will help Paytm expand its payments bank operations as well as grow its user base and introduce more financial products for consumers.
With this funding SoftBank picks up a stake of 20 per cent and joins Alibaba Group as a major shareholder in the company and will take a seat on the Paytm board.
According to industry insiders, the deal values the company at around $8 billion. However, there was no official confirmation from Paytm on the contours of the deal.
One97 Communications had raised $60 million in August last year from Taiwan's Mediatek at a valuation of around $4.8 billion.
With the completion of this round of funding, One97 Communications, which started as a value-added service provider in 2000-01, has raised over $2 billion through external funding. Its present investors include Ant Financial (Alipay), Alibaba Group, SAIF Partners and Mediatek.
Paytm plans to invest Rs 10,000 crore (approximately $1.6 billion) over the next three to five years.
"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 underserved Indians," the company said in a statement today.
"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.
SoftBank, which was an early investor in Alibaba, has committed investments of over $10 billion in India. While it has pumped in close to $2 billion into Indian startups such as Snapdeal, Ola and Housing.com in the last few years, it has also written off a significant portion of that on account of loss in valuation.
The investment comes at a time when SoftBank is working on a sale plan of e-commerce firm Snapdeal. SoftBank is the largest shareholder in Snapdeal, which is locked in an intense battle with Amazon India and Flipkart.
Paytm has been one of the prominent beneficiaries of the government's move last November to scrap high denomination notes. It has seen a growth in transactions on its platform as well as expansion in the number of users.
Paytm founder and CEO Vijay Shekhar Sharma said: "This investment by SoftBank and support of the incredible entrepreneur Masa Son is a great endorsement of our team's execution and vision."
Paytm offers mobile wallet (over 220 million users) and e-commerce services and will launch its payments bank operations from May 23.
Snapdeal clears air
Snapdeal today said it has no outstanding dues towards sellers on its platform. The statement comes after the All India Online Vendors Association alleged that Snapdeal had not settled dues with many sellers. Snapdeal said payments to sellers are made 6-10 times a month and typically, sellers receive their payments within 3-5 days of the sale of their goods.