One97 Communications Ltd, which owns online payments service and shopping website Paytm, is in advanced talks to raise $300-350 million from investors including MediaTek Inc, Temasek Holdings Pte and Goldman Sachs Group Inc, according to unconfirmed reports today.
Taiwan's Foxconn and Singapore's sovereign fund GIC Pte are also likely to participate in the latest round, besides existing investors Alibaba Group and SAIF Partners.
The deal, which is expected to close in 30-60 days, will value Paytm at about $5 billion, more than double its last reported valuation of $2 billion in May 2015, according to a report in The Mint. The final structure of the deal is being worked upon.
Alibaba and its affiliate Ant Financial are yet to decide on whether to put money directly into the parent company, One97, or buy stakes in subsidiaries Paytm Payment Bank and Paytm E-commerce. Alibaba is also in discussions with the parent on whether to pump in fresh capital or buy stakes from existing shareholders and founder Vijay Shekhar Sharma.
With the fresh funds, Paytm, which had cash of about $300 million in hand as of June, will be able to build a strong war chest at a time when rivals are struggling to raise capital or are accepting smaller investments.
If completed, the Paytm transaction will be the largest funding round of any start-up in India this year.
The investment from Taiwanese chip maker MediaTek will help Paytm bundle its mobile app in phones that are fitted with MediaTek chipsets.
A Paytm spokesperson declined to comment. Sharma could not be reached for a comment.
''Paytm is an important strategic partner of Alibaba Group and Ant Financials and we will 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 the world,'' an Alibaba Group spokesperson said in an email response to Mint's queries.
''We continue to work closely with Paytm as we have seen tremendous result of our strategic partnership since Ant's investment in Paytm in February 2015,'' an Ant Financial spokeswoman said in an email.
MediaTek has around 35 per cent of India's market share for processors used to power mobile phones, ahead of rivals including Qualcomm Inc. and Spreadtrum Communications Inc., according to a report by Bloomberg. In May, MediaTek invested an undisclosed amount in Paytm's smaller rival MobiKwik, run by One MobiKwik Systems Pvt. Ltd.
Investor interest in Paytm, the top online payment services provider in India, is because an overwhelming majority of transactions in the country are settled through cash, offering plenty of opportunity for growth.
Paytm founder Sharma is also one of the 11 recipients of a payments bank licence from the Reserve Bank of India (RBI) in August 2015 and is set to launch Paytm's payments bank business by Diwali.
Last year, Chinese ecommerce giant Alibaba invested in Paytm, expecting the company to become the biggest payment services provider on the back of a large marketplace and by creating an affordable payments infrastructure even in the offline space, a model Alibaba follows in China.