Mobile payment and commerce platform Paytm on Thursday announced receiving an investment worth Dollars 1.4 billion from Japanese Internet and telecom major SoftBank Group.
Image: SoftBank chairman and CEO Masayoshi Son (left) with Paytm founder Vijay Shekhar Sharma.
SoftBank, which was an early investor in Alibaba, has committed investments of over $10 billion in India.
"Paytm plans to invest Rs 10,000 crore (approximately $1.6bn) over the next three to five years towards its commitment to enabling half a billion Indians to join the mainstream economy". Having reaped unprecedented gains after the government's demonetization drive past year, Paytm is now the second most valued domestic startup after Flipkart which saw its valuation drop from $15.2 billion to $11.6 billion post its latest round.
"SoftBank backing us shows their belief in Paytm and our plans of becoming a full-fledged financial services company".
This is one of the biggest funding ever garnered by an Indian e-commerce firm and will help SoftBank to maintain its bellwether status of being the lead investor in the country.
Payment banks are seen as a growing opportunity in a country with plenty of smartphones but with millions of Indians who lack formal access to banking services.
In addition, Paytm witnessed an uptake in its movie ticketing and travel booking (rail, bus and flight tickets) businesses. Paytm with the backing of SoftBank gets an edge over other local internet players as it will be able to fight bigger rivals in the e-commerce universe and expand its payments business.
Paytm announced in February that it has now has over 200 million users of its mobile wallet, which is a popular payment method in India.
Paytm is owned by One97 Communications, which has 45% stakes belonging to China's Alibaba and its online payment affiliate Alipay. 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 previous year. 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. Acronym for "Pay Through Mobile", it was launched in August 2010 as an online recharges and bill payments platform and soon expanded into ubiquitous online and offline use-cases.