In one of the largest funding round by a single investor, Japan’s Softbank has committed to fund Paytm with USD 1.4 billion, the Noida-based company said in a statement today. Paytm is now Softbank’s largest investment in India.
Moneycontrol had reported about Paytm’s impending plan to raise additional funds from Softbank, earlier this month. The company did not specify if Softbank has bought additional shares in the company following the funding.
Commenting on the development, Paytm’s Vijay Shekhar Sharma said, “We are at an inflection point in our journey with Paytm. 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.”
The e-wallet major has been seen as one of the major beneficiaries from PM Narendra Modi’s demonetisation drive, under which the government banned Rs 500 and Rs 1,000 promoted digital transactions in the country.
“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 and CEO, SoftBank Group Corp.
Following the funding, Softbank will get a board seat in the company.Expressing happiness on the latest fund-raise Sharma tweeted:
— Vijay Shekhar (@vijayshekhar) May 18, 2017
What an honour to have my inspiration Masayoshi Son as partner in Paytm ! Welcome Softbank as key large... https://t.co/JYsfXDEafr— Vijay Shekhar (@vijayshekhar) May 18, 2017
Paytm’s parent company, One97 Communications, was valued at USD 4.2 billion in 2015. The company did not reveal the valuation for the current fund-raising but according to reports, the company could be valued anywhere between USD 7 billion to USD 9 billion.
The mobile payments and commerce platform will use the funds to expand its user base and build a suite of financial services products.
Paytm plans to invest Rs 10,000 crore over the next 3-5 years towards user acquisition, the company said. As a part of this vision, the company is going to launch the Paytm Payments Bank on May 23, for which it recently received a go-ahead from the Reserve Bank of India.
Softbank has now become the second biggest investor in Paytm, after Alibaba. In turn, Softbank gets a safe investment in Paytm, as the Japanese company has been incurring valuation losses on two of its other investments in India - Snapdeal and Ola. Softbank recently wrote off USD 1.4 billion on Snapdeal and Ola investments for the year ending March 31.Watch: How Online Shopping Works