Indian payment firm Paytm raises $1.4bn from SoftBank

SoftBank Chairman and CEO Masayoshi Son with Paytm founder Vijay Shekhar Sharma in New Delhi on Thursday

The funding will help Paytm expand fast its soon-to-be launched payments bank operations as well as grow its user base and introduce more financial products for consumers. In all, SoftBank will get a 20% holding the digital payments player through the primary and secondary issuance of shares.

SoftBank joins Alibaba and its payments affiliate Ant Financial as amongst the largest investors in One97 Communications which operates Paytm.

A source told Reuters that Softbank bought up a 14.2% stake in One97 Communications, equivalent to USD1 billion in new shares and USD400 million in existing shares.

Flipkart - which is in talks to buy Snapdeal - had raised a similar amount last month, although from three investors Tencent, eBay and Microsoft.

SoftBank chairman Masayoshi Son said: "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".

Analysts said SoftBank was seeking to emulate in India its strategy in China, where Alibaba runs its own digital payments provider Alipay.

Paytm has recently announced that the operations of it payment bank will be starting from May 23. It now has over 220 million users and has over five million offline merchants across India.

Owing to the same, it plans to soon launch the Paytm Payments Bank, a mobile-first product that will reach every corner of the nation, and focus on the millions of unserved and under-served Indians. Even as SoftBank backs Paytm, the Masayoshi Son- led internet and telecoms conglomerate, which has ploughed around $2 billion in the country over the past few years across startups like Ola, Grofers and Oyo Rooms, is finalising a deal to sell its once-prized portfolio company e-commerce marketplace Snapdeal to Flipkart in a cut-price deal. The company had to write off a significant portion of that after the devaluation of those investments. Interestingly, SoftBank was an early investor in Alibaba.

One97 Communications had raised $60 million in August a year ago from Taiwan's Mediatek at a valuation of around $4.8 billion. One of the biggest gainers of that demonetization was a start-up called Paytm, who via persistent advertising were already gaining popularity as a cashless app or mobile wallet in the Indian market.

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