Paytm raising up to $2 billion; valuation may soar to $18 billion

Online payments services company Paytm is in the midst of raising $1.5-2 billion from existing investors SoftBank Vision Fund and Alibaba’s financial affiliate Ant Financial, said people with knowledge of the development.

The latest financing round at One97 Communications, the parent of Paytm, is likely to peg the company’s valuation at $16-18 billion, these people said, adding that new investors may join the current round.

Paytm is likely to see a significant spike in the $10 billion valuation ascribed to it when Warren Buffett-led Berkshire Hathaway invested $300 million last year. The company was valued at $16 billion in a secondary round a few months ago, said people aware of the matter.

A secondary sale is when an existing investor sells shares to a new one and the money does not come into the company's coffers.



Increasing Competition

“While SoftBank and Ant Financial’s capital is already in, the company is engaging with other investors and may look to take the round to as much as $2 billion. But it is most likely to be an internal round,” said one of the persons cited above.

SoftBank, which first invested in the company in 2017, holds a 19% stake. The Alibaba group, through Ant Financial and Alibaba directly, owns 38% of One97 Communications.

A SoftBank spokesperson said the company would not comment on speculation. Paytm founder Vijay Shekhar Sharma declined to comment.

Paytm needs capital to fend off competition from the payment units of global giants Google and Amazon besides local rivals such as Flipkart-owned PhonePe in a fast-growing digital payments market, which got a boost after demonetisation in late 2016. Paytm clocked more than 221 million transactions on the Unified Payments Interface (UPI) last month. 

PhonePe and Google Pay are snapping at its heels, with transactions estimated at 180-190 million each. PhonePe is set to raise $1 billion after being hived off from Flipkart, ET reported on March 26, which will add to the competitive frenzy in a market that’s driven by freebies and cashbacks.

“The payments battle in India is a global one with deep-pocketed players in the fray and Paytm investors understand that if they don’t double down now they may lag behind. Currently Paytm has shown market leadership but the lead needs to be maintained, which is why the capital raise is important,” said an investor in the company requesting anonymity. According to this investor, Ant Financial, which runs Alipay, will value Paytm at least 20% higher than at the last funding round. Ant Financial’s oftdiscussed plans to go public are said to have been deferred for now but it needs to show growth in emerging markets, especially India, said the person cited above.

Cashbacks and subsidies have helped drive online payment transactions on the consumer side along with incentives to encourage adoption by merchants.

Paytm is looking to go beyond the payments business with a focus on new products such as Paytm Postpaid, its pay-later offering. It’s also floated Paytm Money, a platform for selling mutual funds, along with making a push in the travel and hotel booking space.

The latest fundraising effort comes as its struggling e-commerce business has been downsized substantially. Paytm Mall, a subsidiary of One97 Communications, is said to be in talks with eBay to get a fresh capital infusion at a lower valuation than in previous rounds.

Snapdeal an opportunity for unorganised sellers to go online: Company official

Chandigarh: Snapdeal is making progress in taking Indian markets online to offer sellers a robust and future-ready opportunity to grow their business by expanding their operations, a senior company official said here on Wednesday. "In India, (just) 10 per cent of the retail is in the organised sector... In the past, unorganised retail was adversely impacted by organised retail... Snapdeal built a marketplace to provide these (unorganised) sellers with an opportunity to move online in order to grow," Snapdeal Senior Vice-President (Corporate Affairs and Communications) Rajnish Wahi said here. 

He said the country's overall consumption demand is worth USD 800 billion currently and is expected to reach USD 2 trillion by 2025. "Online commerce is nearly 2 per cent of India's retail and will reach 10 per cent by 2025. Thus, the online market in India will be worth USD 200 billion in the next 7 years." 

On the Punjab market, he told reporters that Punjab-based retailers are the highest sellers of sports goods on Snapdeal and serve buyers all over the country. 

"Some of the popular sports goods sold online by Punjab-based sellers are punching bags, badminton racquets, sports shoes, hand wraps, and home gym sets. They also sell huge quantities of safety rods and protein supplements," Wahi added. 

Snapdeal has more than 5 lakh registered sellers from across India including 15,000 in Punjab, he said. 

"On the buyer's side, the e-commerce market in India is growing not only in size but also in diversity. In 2018, India's e-commerce heralded the rapid emergence of buyers from India's tier-II and III cities. This growth of e-commerce into India's non-metro cities is expected to accelerate in 2019 and over the next few years," he said.


Punjab is industrially an aggressive and prosperous state and is a significant market, he said. 

"It is very difficult (for buyers) to get to 10 bazaars and figure (out) what you want. What if (they) can get everything at home, get better price, better choice to return goods and exchange stuff," he added. 

The official said most of the sellers on Snapdeal are from the brick and mortar market and they are the ones who are going online. "This is for them a new distribution channel... I don't think we are cannibalising brick and mortar, we are actually giving them new distribution modes," he said in response to a question.

Sonia Dhawan, accused in Paytm case, rejoins company

NEW DELHI: Sonia Dhawan, the former Paytm executive, who was also one of the prime accused in an extortion bid against the Soft-Bank-backed company’s founder Vijay Shekhar Sharma, is believed to have rejoined the company in a surprising turn of events.

Sources within the company told ET that Dhawan, who had spent nearly five months in jail, along with her husband Rupak Jain, had rejoined the company earlier in the week. The former VP of communications and public relations at the company had been granted bail by the Allahabad High Court earlier this month.

Messages sent to Sharma did not elicit any response till the time of going to press. Jain had been granted bail in February this year, also by the Allahabad High Court. It is unclear whether Dhawan has rejoined Paytm with the same responsibilities she had prior to her arrest.

ET was not able to confirm if and when Sharma had withdrawn his complaint against Dhawan and the other accused. Soon after the news of Dhawan’s arrest had broken, Sharma had told ET that he believed the executive, who had spent an estimated eight years with Paytm, was a “conduit of someone else’s bigger plan”.

“I don’t know how many more people were involved in this sad conspiracy. I am shocked and surprised at things that happened and some claims or theories being pitched. I am sure with support of police and everyone involved we will uncover the details soon,” Sharma had said at the time.

The development comes even as the company is in the midst of raising $1-2 billion from existing investors SoftBank and Alibaba’s financial affiliate Alipay, a transaction that could value the Noida headquartered venture at $16-18 billion.

Dhawan, in her plea before the high court, “claimed innocence and laid stress on fact that there is nothing concrete emerging against her and it cannot be said that the applicant ever indulged in any illegal activity secretly obtaining any data from the laptop of any device of the informant or his company and she never blackmailed as such”.

In its order, the High Court had noted: “There is no active role assigned to the applicant. Suppositional charges have been levelled, which allegations cannot stand concrete. The applicant being lady may be given advantage of provisions contained under Section-437 of the CrPC”.

Dhawan was arrested on October 22, after Paytm senior vicepresident and the company founder’s brother Ajay Shekhar Sharma, lodged an FIR saying she, along with her husband Rupak Jain, another Paytm employee, and a person named Rohit Chomwal had stolen private data of Sharma and tried to extort Rs 10 crore from him.

When Paytm's success story became a case study at Harvard

Vijay Shekhar Sharma is worth a cool $2.6 billion, heading one of India’s biggest start up success stories — Paytm. While his background of Hindi-medium schooling and an engineering degree from the Delhi College of Engineering stands out amid the glossy Ivy League degrees of his contemporaries, life has come a full circle.

The billionaire recently met the president of Harvard University, Lawrence Bacow on the sidelines of an event in China. Sharing photos with the noted academician on Twitter, Sharma wrote, “Though I couldn’t go to Harvard for formal education, today, I met the very inspiring and gracious president of @Harvard. Humbled.”

Vijay Shekhar✔@vijayshekhar

Though, I couldn’t go to Harvard for formal education. Today, met very inspiring and gracious president of @Harvard , Mr. Bakao.
Humbled, thankful

838

11:25 AM - Mar 22, 2019 · Harvard Center Shanghai

67 people are talking about this

Twitter Ads info and privacy

Ironically though, Sharma was destined for Harvard in one way or another. The journey of Paytm from being a recharge platform to a payments bank became the topic of a case study published by Harvard Business School last year.

When SoftBank’s Son missed investing in Amazon for lack of money

SoftBank Group Corp. founder Masayoshi Son, famous for his early investment in China’s top e-commerce company, also had the chance to own a big stake in Amazon.com Inc. -- but he missed out for want of $30 million.

Son, speaking at the Milken Institute conference in Tokyo, said he was close to striking a deal to acquire 30 percent of the U.S. e-commerce pioneer with Chief Executive Officer Jeff Bezos in its early years. Son offered $100 million, but Bezos insisted on $130 million. It’s not that Son thought the stock wasn’t worth it; he just didn’t have the money.

"We were laughing about it when I met him again recently,” Son said. "It’s a big mistake that I didn’t make that investment. I just didn’t have enough cash. But my image, my vision was right.”
Amazon’s market value is now more than $860 billion, meaning that stake would be worth about $260 billion. SoftBank’s stake in China’s Alibaba Group Holding Ltd. is worth about 14.5 trillion yen ($132 billion).

Son did mention he had been close to buying a stake in Amazon two years ago in an interview with David Rubenstein. Son didn’t mention the financial details of the transaction at that time.

In the Milken Institute interview, Son made the point about Amazon as he explained why he has such a voracious appetite for raising capital. SoftBank announced a $100 billion Vision Fund to make technology investments, the largest fund ever of its kind. Son has used that money to take stakes in many of the world’s most valuable startups from Uber Technologies Inc. and WeWork Cos. to Didi Chuxing.

"This time I don’t want to make the same mistake,” Son said. “So I prepare enough money.”