One97 Communications, the parent company of Paytm, is in
discussions with MediaTek, Goldman Sachs, Temasek and other investors to raise
fresh funding of about Rs. 2,000 crores ($300 million)! The company’s existing
investors including Alibaba, Alipay and SAIF Partners are also going to
participate in this new round.
In the last round of capital infusion in June, Paytm was
valued at $2.3 billion, and with this new round, the company’s evaluation will
increase to more than double and amount to a whopping $5 billion! This money
will be deployed across all the different businesses that Paytm runs, including
online marketplace, digital payments and the upcoming payments bank. The Paytm
Payment Bank is all set to be launched in October to house the financial
services businesses. It is founder Vijay Shekhar Sharma who holds the payments
bank license. However, the split of cash between the eCommerce business and
payments bank has not yet been determined.
Last year, Ola raised $900 million, Flipkart raised $700
million and Snapdeal raised $500 million. However, this year the amounts have
been quite low with Snapdeal having raised $200 million and BigBasket having
raised $150 million only. Therefore, if this deal successfully takes place, it
will be the largest financial round in India’s internet space this year.
While other marketplaces are having a tough time raising
capital this year, Paytm leads in the field because it has established market
leadership in consumer payments with exclusive Paytm offers. Forrester Research analyst, Satish Meena says, “In
the payments space, they (Paytm) have a big lead and an edge in terms of
execution on the ground. They are tapping the next 100 million customers, while
other mobile wallets are pushing their services to the same top 50 million
customers by offering cashbacks.”
Over the last one year, Paytm has been entering areas like
petrol pump payments, taxi payments, movie ticketing and much more. This is
what is going to help Paytm raise its monthly gross merchandise value to $500
million by the end of this year. With Alibaba and Alipay having invested Rs.
4,400 crores in 2015, we have to wait and watch how much of capital is invested
in the company in this new round.
Paytm’s rivals Mobikwik and Freecharge have recently raised
$40 million and $150-200 million respectively since October 2015. Flipkart is
expected to launch its mobile payments business under PhonePe very soon and
plans to invest $100 million in the project initially. The total payment
through digital platforms is expected to reach $500 billion in India by the
year 2020!
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