Paytm plans to invest Rs 10,000 crore or about $1.6 billion over the next 3-5 years in bringing 500 million customers on board
Japanese telecom and internet firm Softbank Corp has invested $1.4 billion in One 97 Communications Limited, which owns mobile payments and commerce player Paytm. The deal will be the largest infusion by a single investor in a digital company and will make Softbank Corp one of the largest investors in the Noida-based company along with Chinese e-commerce giant Alibaba and its payments affiliate Ant Financial.
Paytm plans to invest Rs 10,000 crore or about $1.6 billion over the next 3-5 years in bringing 500 million customers on board, more than double from the current 220 million. The company also recently received the final license from government regulator RBI to launch Paytm Payments Bank, which will be a mobile-first product.
ET had reported last month that Paytm was set to raise $1.4-1.9 billion from Softbank in a deal which would value the company between $8 billion to $9 billion. SoftBank, owned by Japan's richest man Masayoshi Son, is likely to take a 20% stake in One 97 Communications through a mix of primary and secondary share purchase. Softbank will also have a representative on One 97's board of directors.
The transaction would be a significant jump in the valuation of Vijay Shekhar Sharma founded company in less than 8 months after it raised capital at $4.8 billion valuation from Taiwanese semiconductor maker MediaTek in August 2016.
Paytm's Sharma, who recently entered the TIME’s ‘100 Most Influential People‘ list, said at a press conference last month that it closed FY17 with three times growth in total transactions to 1.5 billion.
"This investment by Softbank and support of the incredible entrepreneur Masa Son is a great endorsement of our team's execution and vision. We believe we have a great opportunity to bring financial inclusion to half a billion Indians,” said Sharma in a statement.
Softbank's investment comes as payments opportunity has got a further boost after government's push for digital transactions since demonetisation in November last year. Total payments through digital instruments are expected to reach $500 billion by 2020 in India, according to a study by Boston Consulting Group, with customers payment to merchants driving this growth.
“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. We are excited to partner with Paytm in this journey and will provide them with all our support,” said Masayoshi Son, Chairman & CEO, SoftBank Group Corp
Softbank has till now deployed close to $2 billion in India across companies like online marketplace Snapdeal, cab hailing application Ola, budget hotel player Oyo, mobile advertising firm Inmobi, housing classifieds firm Housing (which merged with Proptiger) and grocery delivery application Grofers.
Softbank is also in talks to sell Snapdeal, it's largest investment in India, to Flipkart and further invest in the combined entity. Separately, Softbank is also looking to sell Snapdeal's payments unit Freecharge to Paytm.