Paytm raises $1.4 b funding from SoftBank

Japan's SoftBank invests US$1.4bil in Paytm

This is the largest funding by an investor in a single round in an e-commerce company.

With this one-time investment of United States dollars 1.4 billion, SoftBank will hold a 20 percent direct stake in Paytm, along with a 12 percent indirect holding through its majority stake in Alibaba, the Chinese internet giant that has 40 percent stake in One97, Paytm's parent company. Softbank has pledged an investment of US$1.4 bn to gain 20% stake in the company, which now pushes the valuation of Paytm past US$7.0 bn, making it the second most valuable startup in the country, only behind Flipkart.

The Noida-based One97 Communications, which operates Paytm, along with SoftBank, said Thursday the investment will help the company grow its leadership in the country's burgeoning online payments ecosystem, expand its user base and build a suite of financial services products. This happened just months after China's Alibaba invested $177 million in Paytm Mall, Paytm's marketplace business unit.

Paytm founder and CEO Vijay Shekhar Sharma said: "This investment by SoftBank and support of the incredible entrepreneur Masa Son is a great endorsement of our team's execution and vision".

Paytm plans to invest Rs 10,000 crore (approximately United States $1.6bn) over the next three to five years towards its commitment to enabling half a billion Indians to join the mainstream economy.

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SoftBank is also pushing to engineer a merger between Snapdeal, India's number three e-commerce player and one of the Japanese group's biggest investments in India to date, and market leader Flipkart. "We believe we have a great opportunity to bring financial inclusion to half a billion Indians", said Vijay Shekhar Sharma, founder of Paytm.

Paytm has 220 million users in Asia's third-biggest economy and plans to spend USD1.5 billion over the next three to five years on expanding its services. "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.

The company appointed Renu Satti as the new CEO of its payments bank and expects to start operations from May 23 after multiple delays.

In addition to seeking to solidify its lead in digital payments, Paytm, founded in 2010, is aiming to launch a payments bank, an institution that can take deposits and remittances but cannot lend. In January 2014, it launched the Paytm Wallet.

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