SoftBank invests in India's Paytm
SoftBank Group has invested in One97 Communications, the parent company of Indian online payments and e-commerce platform Paytm.
In a blog post, Paytm said SoftBank’s investment represents the largest round from a single investor in India’s VC industry. While it did not disclose financial details of the transaction, Indian media has reported that it came to $1.4 billion, including $400 million worth of shares from SAIF Partners and founder Vijay Sharma. SoftBank is expected to take a 20% stake in the company.
Paytm will use the capital to grow its user base and its portfolio of financial products, in particular its planned payments bank, for which it recently received approval from the Reserve Bank of India. The new bank took over Paytm’s existing online wallet business in December and will also offer limited banking services such as checkbooks and debit cards to customers who currently lack access to the financial system.
This is SoftBank’s first investment in Paytm, which counts Chinese e-commerce giant Alibaba Group and its online finance affiliate Ant Financial Services Group as major backers. Ant Financial bought a 25% stake in One97 for a reported $550 million in 2014, and Alibaba bought a 20% stake later that year after Paytm was spun off.
In addition to its online wallet, Paytm also operates online marketplace Paytm E-Commerce. Paytm created the unit last year to separate the marketplace and online payment operations. Alibaba and SAIF invested $200 million in the e-commerce unit earlier this year.
SoftBank’s round for Paytm indicates its continued commitment to invest in India despite the troubles faced by its most prominent portfolio companies in the country, online marketplace Snapdeal and ride-hailing app Ola. The group recently announced that it marked down the two companies by JPY160 billion ($1.4 billion) in 2016.
Currently, SoftBank is reported to be leading negotiations for a buyout of Snapdeal by its largest domestic rival Flipkart. Snapdeal is also reportedly in talks to sell its online payments unit FreeCharge to Paytm.
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