PayTM to raise ~$2 billion from Softbank in a move to expand business

One97, the parent company of PayTM, is set to raise INR12,000 crore capital from Japanese media and telecom conglomerate SoftBank which is likely to become the single-largest round of funding for an Indian digital commerce firm. The deal will value the startup at $9 billion, and will provide a 20% stake to the Japanese firm. The valuation is significantly higher than the $4.8 billion at which it last raised funds from MediaTek eight months ago.

It recently established its new subsidiary PayTM Financial Services. The startup has earmarked $1 billion investment for to expand its payments business into high growth areas like lending and insurance. It is also investing in expanding its offline payment network. The capital is raised considering the startup building a warchest for its payment operations which faces heightened competition from players like WhatsApp and Flipkart’s Phonepe. Other players such as Reliance Jio and Truecaller have also entered the space, besides incumbent banks’ own payments applications.

Softbank is undoubtedly one of the largest investors in the country’s startup ecosystem. It has so far deployed close to $2 billion in a clutch of Indian companies including online marketplace Snapdeal, ride hailing app Ola, hotel room aggregator OYO, and hyperlocal delivery service Grofers.