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SoftBank likely to invest $1.9 bn, pick up 20% in Paytm

28 April, 2017

Masayoshi Son’s media and Internet conglomerate SoftBank Group is likely to put in $1.9 billion (Rs 12,000 crore) into One 97 Communications Ltd, which runs digital wallet firm Paytm, a financial daily reported.

The funding is likely to value Paytm at $9 billion and SoftBank will pick up 20% stake in the payments firm, a report in The Economic Times stated, citing two individuals familiar with the transaction.

The development comes a week after media reports stated that SoftBank was likely to invest anywhere between $1.2 billion and $1.5 billion in the payments company at a pre-money valuation of $7-$9 billion.

E-mail queries sent to SoftBank and Paytm did not immediately elicit a response.

The rumoured deal comes in the backdrop of Paytm’s founder and chief executive Vijay Shekhar Sharma committing Rs 10,000 crore over the next three years to ramp up its banking and financial services business, a PTI report stated. Though Paytm has received approval from the Reserve Bank of India to launch its payments banks unit, the firm is yet to roll out operations.

Paytm was valued at $4.8 billion after its last fundraise from Taiwanese chipmaker Mediatek in August last year. The Noida-based firm has ventured beyond its traditional wallet offering into the payments and e-commerce space, creating two separate entities for these businesses. In December 2016, it said it would be merging its wallets business with its payments bank, as per guidelines given by the Reserve Bank of India. The company has also ventured into the wealth management space with a programme called Digital Gold, which allows users to buy, store and sell gold through their smartphones.

In March this year, Paytm raised a total of $200 million (Rs 1,334 crore) from Chinese e-commerce major Alibaba and existing investor SAIF Partners for its e-commerce vertical. The investment increased the stake of Alibaba and its affiliate Ant Financial (the parent company of Alipay) in Paytm E-Commerce from 40% to 62%.

For SoftBank, the deal will not only ensure its exposure to the payments sector but will also make it 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 28% stake in Jack Ma’s Internet behemoth, an ET report had stated.

Though its investments in the country have failed to yield returns, SoftBank has remains bullish on India. Masayoshi Son has committed to invest up to $10 billion in the country 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.

At the same time, SoftBank is also 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 last week. The deal, reportedly in its final stages, is likely to be completed within a few weeks. SoftBank may invest $1.5 billion in the merged entity, which will give it almost 15% stake, according to media reports.

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SoftBank likely to invest $1.9 bn, pick up 20% in Paytm

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