Japanese Internet conglomerate and investor SoftBank Group Corp has now set its sights on the payments space in India, and is in talks to invest $1.2-1.5 billion in Vijay Shekhar Sharma’s Paytm, media reports said on Wednesday.
The deal, if it materialises, could value the One97 Communications Ltd-owned fin-tech company at $7-9 billion, the Mint newspaper reported, citing three people aware of the development it didn’t name.
The transaction will see SoftBank buying shares from Paytm’s existing investor SAIF Partners and founder Sharma, apart from investing money in the company. The fin-tech firm may buy out Snapdeal-owned mobile wallet firm FreeCharge in a "fire sale, though the fundraising is not contingent upon the proposed buyout," the report added.
The Economic Times pegged Paytm's potential valuation for the deal at over $7 billion and said that SoftBank will likely acquire a 20% stake in the company. The report added that Paytm was seeking a higher valuation of up to $8 billion.
In its last fundraise from Mediatek last year, Paytm was valued at $4.8 billion (post-money), according to VCCircle estimates.
SoftBank declined to comment while email queries sent to Paytm did not elicit a response at the time of filing this report.
If the deal goes through, SoftBank will not only get a slice of the buzzing payments sector, but also emerge as the largest shareholder in India's second-most valued Internet firm. SoftBank is also an early investor in Alibaba (the largest stakeholder in Paytm), holding a 28% stake in Jack Ma’s Internet behemoth, the ET report added.
SoftBank has been aggressive with its India strategy of late, engineering mergers and acquisitions and consolidating its portfolio, after its investments in the county failed to yield encouraging returns.
However, it has maintained its bullish stance on India—chief executive Masayoshi Son has committed to invest up to $10 billion here in a decade. Its investments in India so far total a little over $3 billion, including the recent infusion of about $250 million in cab-hailing firm Ola. SoftBank’s other portfolio firms in India include messaging app Hike, troubled e-commerce firm Snapdeal, budget hotel aggregator OYO Rooms and mobile advertising firm InMobi.
In October last year, SoftBank said it would launch a $100-billion tech-focussed global fund, called the SoftBank Vision Fund, along with Saudi Arabia's sovereign wealth fund Public Investment Fund and other investors.
Rumours have been flying thick and fast about SoftBank orchestrating a Flipkart-Snapdeal merger, the biggest-ever in the Indian e-commerce space. Flipkart has appointed Goldman Sachs as an adviser for the proposed deal, a media report said on Wednesday. The deal, reportedly in its final stages, is likely to be completed within a few weeks.
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