India-based fintech developer Paytm is in the final stages of talks to raise $2bn in equity and debt financing from investors including Ant Financial, the financial services affiliate of e-commerce firm Alibaba, Bloomberg reported yesterday.
Internet and telecommunications group SoftBank is expected to take part in the round, while hedge fund manager Discovery Capital Management is also considering an investment. The round would value Paytm at $16bn and the capital would be split equally between equity and debt.
Rumours about Paytm’s ambitions to raise as much as $2bn at a valuation of up to $18bn first surfaced in March this year. At the time, SoftBank was thought to be using its Vision Fund for the deal, but Bloomberg’s report made no mention of the vehicle.
Established by One97 Communications, Paytm operates a mobile payment app in India that allows users to make payments in retail stores, pay their utility bills or add credit to their mobile phones.
The company is hoping to raise money to fend off an increasing amount of competition in a market set to be worth as much as $1 trillion by 2023, according to Credit Suisse.
One97 also owns e-commerce platform Paytm Mall, mutual fund investment platform Paytm Money and consumer credit provider Paytm Postpaid. Paytm and Paytm Mall have begun raising capital separately, but much of their earlier equity was supplied to One97.
Ant and Alibaba jointly hold 38% of One97, having purchased the entire stake held by conglomerate Reliance Industries’ Reliance Capital division in March 2017. SoftBank currently owns a 19% stake, having injected $1.4bn through a primary and secondary deal in May 2017.
Private equity firm Berkshire Hathaway, which has a 2.9% shareholding, had supplied a reported $300m in funding in August 2018 after fabless semiconductor MediaTek invested $60m in 2016. One97’s shareholders also include growth equity firm SAIF Partners, which reportedly holds a 19.5% stake.
