Paytm is close to secure $2 billion of new financing from investors including Jack Ma’s Ant Financial and SoftBank Group, a mega-deal that is expected to raise the temperature in India’s increasingly heated financial payments arena, reported Bloomberg.
Rob Citrone’s Discovery Capital Management is also in discussions to join a funding round that values the country’s top online financial services firm at $16 billion.
If a deal is finalised, Paytm could outstrip fellow high-profile Asian start-ups such as Grab and Gojek in valuation. Billionaire Paytm founder Vijay Shekhar Sharma is raising capital to protect the start-up’s share of a potentially $1 trillion Indian payments market from newer entrants Facebook, Alphabet’s Google and Walmart-owned Flipkart’s PhonePe.
Over the past year, a string of new apps have made payments increasingly easy, bringing discounts and cash bonuses to young, smartphone-savvy users.
Paytm remains the leader for now. The firm has in a decade become India’s biggest digital payments brand, attracting big names in investing from Alibaba co-founder Ma and SoftBank founder Masayoshi Son to Warren Buffett.
Sharma got a huge boost in 2016 after India’s government moved to eliminate most of the nation’s paper money in circulation in a bid to curb corruption. His start-up, a pioneer in the country’s nascent field, saw tens of millions of consumers and hundreds of thousands of businesses sign up for digital services in a matter of months.
The Indian payments market remains a chaotic field where the rules are hazy on what players can offer, yet its promise has lured a string of competitors including Indian banks, its postal service and its richest man, Mukesh Ambani.
Credit Suisse Group now estimates that the Indian digital payments market will touch $1 trillion by 2023 from about $200 billion currently. Cash still accounts for 70 per cent of all Indian transactions by value, according to Credit Suisse, and neighbouring China is far more advanced with a mobile payments market worth more than $5 trillion.
Ant Financial, China’s largest provider of internet financial services and one of Paytm’s earliest backers, said that it will continue investing in mobile-payment providers around the world to boost offshore revenue and buttress itself against rising competition and tighter regulation at home.