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Paytm looking to snap up FreeCharge for $45-90 million: report

11 May 2017

Online payment service provider Paytm is reported to have signed a non-exclusive term sheet to acquire rival digital payments platform FreeCharge, from beleaguered online marketplace Snapdeal, in an all-cash deal estimated to be worth between $45 and $90 million.

Vijay Shekhar Sharma-led Paytm is also reported to be in advanced stages of discussions to raise up to $1.9 billion in fresh funding from Japan's Soft-Bank, a move that could take Paytm's valuation to $8 billion or up to $9 billion.

Alibaba Group-backed Paytm is expected to start financial and commercial due diligence of FreeCharge next week and once the process is over, the deal may be finalised in a month's time, reports said.

Snapdeal, which owns FreeCharge, is itself being sold to rival Flipkart in a deal brokered by its largest shareholder SoftBank, in a stock transaction, now pegged at $750 million.

Snapdeal is, however, free to sell FreeCharge to other suitors as well, since the term sheet signed with Paytm, reportedly last week, is non-exclusive, which allows Snapdeal to engage with other potential buyers.

Reports quoting sources said the company has also reinitiated contact with global payments giant PayPal, which had earlier come close to picking up a majority stake in FreeCarge but had walked away due to valuation differences.

Apart from PayPal, two domestic banks and a couple of private equity firms have also expressed interest in the Bengaluru-based company, according to sources.

Apart from Paytm, FreeCharge, which was acquired by Snapdeal for $400-450 million in April 2015, in what was then the largest acquisition in the Indian startup ecosystem, competes with the likes of Naspers-owned PayU India and MobiKwik, amongst others.

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