Paytm’s valuation set to hit $5bn, 5-fold jump in 18 months

BENGALURU: Digital payments and commerce platform Paytm is close to raising $300 million in a round that is likely to be led by Taiwan’s Mediatek. The funding is expected to value the company at $5 billion (post money). People aware of the development told TOI that Paytm is also in talks with Chinese international conglomerate and investment company Fosun, Taiwanese electronics manufacturing company Foxconn, Singapore’s sovereign wealth funds GIC and Temasek for participation in this round.

Paytm’s existing investors Alibaba Group and SAIF Partners will also participate in the round. In the last fund-raise, the company was valued at about $2.8 billion. The fresh cash will be used for the company’s three verticals — the payments business, the planned payments bank and the e-commerce business.

Sources said Goldman Sachs has also held talks with Paytm but the Noida-based company is not comfortable with the terms being put by the investment bank.

“Mediatek is in the final stages of talks to lead the round. Other Southeast Asian investors are still in discussion to top up the round and it might take some time,” a person directly aware of the talks said.

When contacted, Paytm founder Vijay Shekhar Sharma declined to comment on the matter. Temasek said it does not comment on market speculation. Alibaba said Paytm is an important strategic partner and it would continue to support and work closely with Paytm. “It is our common goal to provide equal access to financial services in India, China and around world,” it said. Emails sent to SAIF Partners, Mediatek, GIC, Foxconn, and Fosun did not elicit a response till the time of going to print.

The development comes at a time when large Indian startups are struggling to raise fresh capital at valuations higher than in their last rounds. Flipkart, India’s largest e-commerce company, last raised money at $15.2 billion, but is now taking time to close a new round because investors are wary of offering a higher valuation. Delhi-based online marketplace Snapdeal closed a refinancing round of $200 million in February but that was largely via secondary sales, where existing investors sold stakes to new investors; only about $50 million came into the company’s books.

Top Comment
Every stock in India is over valued . We are a nation of cons and suckersviswanathan narayanaiyersubhramanyashastri

Paytm recently separated its commerce business from the payments business. Sharma, who has a 21% stake in the venture, holds the payments bank licence in his personal capacity. How much of the fresh funds will be allocated to which business has not been finalized yet. But a significant chunk is expected to go towards the payments bank launch and its core business — online payments.

The fresh cash would also give Paytm muscle to build its commerce business to fight rivals like Amazon and Flipkart. Alibaba Group has invested $700 million in Paytm so far and holds a 40% stake in the company. The Chinese e-commerce major is planning to start an e-tailing business in India early next year, and is said to be considering using Paytm’s commerce entity as the launch vehicle.

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