Japanese conglomerate SoftBank (9984.JP) invested USD1.4 billion in the parent company of Indian electronic payments platform Paytm.
Image: SoftBank chairman and CEO Masayoshi Son (left) with Paytm founder Vijay Shekhar Sharma. If that deal goes through, SoftBank will have stakes in both of India's largest internet companies - Paytm and Flipkart.
Paytm stated that the funding will complement its investment plan of around $1.6bn in the next three to five years. Having reaped unprecedented gains after the government's demonetization drive a year ago, Paytm is now the second most valued domestic startup after Flipkart which saw its valuation drop from $15.2 billion to $11.6 billion post its latest round.
Earlier, Paytm launched zero cost QR Code-based payment solution, which was adopted by millions of merchants, and has become synonymous to digital payments in India.
A source familiar with the matter said SoftBank had bought US$1bil (RM4.32bil) of new shares in Paytm parent One97 Communications, equivalent to a 14.2% stake, and a further US$400mil (RM1.7bil) of existing shares. Sharma informed that after this deal, Softbank will get a seat on the Paytm board.
Paytm has recently announced that the operations of it payment bank will be starting from May 23. "We believe we have a great opportunity to bring financial inclusion to half a billion Indians", Sharma said in a statement.
Investors like Softbank are betting big on Paytm as they expect to re-write the Alipay success story in China here in India. It has pumped close to $2 billion into Indian startups like Snapdeal, Ola and Housing.com in last few years.
Previously, Alibaba and its payments affiliate Ant Financial held a 40 per cent stake in One97 before this investment.
"In line with the Indian government's vision to promote digital inclusion, we are committed to transforming the lives of hundreds of millions of Indian consumers and merchants by providing them digital access to a broad array of financial services, including mobile payments", said Son. And also for the grow its user base and introduce more financial products for consumers. The stake was sold to Chinese e-commerce giant Alibaba Group Holdings. Acronym for "Pay Through Mobile", it was launched in August 2010 as an online recharges and bill payments platform and soon expanded into ubiquitous online and offline use-cases.