DIGITAL payment provider and Indian unicorn Paytm is in talks with SoftBank to raise US$1.5 billion in cash, which would make it the biggest shareholder in the Indian company.
The deal with the Japanese technology conglomerate could boost the company’s valuation to US$7 billion to US$9 billion, three sources told LiveMint. The deal will see it buy shares from existing Paytm investor SAIF Partners and founder Vijay Shekhar Sharma as well as investing in the company.
The company’s largest shareholder is currently Alibaba Group and the deal may be partly about fending off government concerns about the influence of a Chinese tech giant in the strategically important finance sector.“Getting SoftBank will help Paytm change the perception of being a Chinese company with the regulators as well as the public,” one of the sources told LiveMint. The two companies already have a relationship as SoftBank was an early backer of Alibaba.
The deal could feed into a merry go round of deals as India’s number three e-commerce player Snapdeal, whose largest shareholder is SoftBank, is being slowly cannibalized by its competitors.
SoftBank also previously made investments in Snapdeal, Ola, Oyo Rooms, and Housing, but if this investment in Paytm is successful, then it would become the Japanese company’s biggest bet in India.
Flipkart is widely expected to buy the struggling online marketplace, but Paytm could use some of its new funds to snap up Snapdeal-owned payments firm Freecharge.
— Shaju John (@NiftyByShaju) April 20, 2017
The deal is neither final nor imminent though, according to someone directly aware of the developments. “A potential transaction is still a few months away,” they said. And sources told the Economic Times SoftBank’s wants to close the deal with Flipkart first before finalizing anything with Paytm.