Paytm raises $1 bn at $16 bn valuation
25 November 2019
Digital payments platform Paytm has raised $1 billion from Softbank and other investors in its latest round of fund-raising, taking its valuation to $16 billion. Paytm, which is expanding its merchant and financial services operations through its latest financing round, will end upas the most valued digital payments company.
The investment round, led by US-based asset management firm T Rowe Price, saw participation by investments from .
The fresh investment round saw the participation of Discovery Capital and D1 Capital, who invested primary capital along with T Rowe Price. The three participants together poured in $400 million in the payment firm whereas Paytm’s existing investors SoftBank ($200 million) and Alibaba Group affiliate Ant Financial ($400 million) put in $600 million together.
With this transaction, SoftBank, which controls about 20 per cent in Paytm’s parent entity One97 Communications, will not be allowed to sell its share for the next five years. Though, SoftBank would have the right to sell its shares to existing investors or rival firm only if Paytm goes for an IPO during this timeline, says a Times of India report.
The Vijay Shekhar Sharma-led firm will use the capital to push its merchant and financial services offerings like lending, insurance and neo banking. For expansion, Paytm founder and CEO Vijay Shekhar Sharma has allocated Rs10,000 crore for the next three years.
It plans to have over 35 million merchants on its platform, against the current base of 15 million, in the next two years.
Paytm claims its margins are now growing positively across payments, commerce and financial services. The company further plans to move away from the discount-led, peer-to-peer payments vertical to focus on online and offline merchants.
In addition to its several financial services, Paytm has been piloting an advertising platform – Paytm Ads. Last month, Entrackr had first reported the development as it began onboarding brands to buy advertising space on the web and mobile apps.
The Noida-based firm has witnessed a sharp downfall in Unified Payments Interface (UPI) transactions in the last one year and had ceded market share to Google Pay and PhonePe. And, despite investing heavily, the company has failed to break even.
Paytm's losses have climbed to Rs4,217.20 crore in FY19, up almost 163 per cent from the previous fiscal, according to its annual report. The company’s operational revenue saw a mere single-digit growth of about 6 per cent to Rs3,232 crore in FY19.