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Japan's SoftBank pumps in $1.8 billion in Paytm

Valuation jumps nearly 50% to $9 billion

Karan Choudhury  |  New Delhi 

paytm
SoftBank Group Corp Chairman and CEO Masayoshi Son (L) with Paytm founder Vijay Shekhar Sharma after announcing Rs 9,000 crore investment in Paytm, in New Delhi (Photo: PTI)

Ensuring that it remains in the driver’s seat of the Indian e-commerce ecosystem even as it continues its talks to sell its biggest bet in the country, Japanese telecom major has invested $1.8 billion in mobile wallet major

SoftBank, after its failed experiment in Jasper Infotech-owned Snapdeal and FreeCharge, in which it invested close to a billion dollars, will be the biggest stakeholder Paytm’s parent company, One97 Communications, pushing Chinese internet giant to second spot.

The move would help maintain its bellwether status of being the lead investor in the country and it will take a seat on the board.

This is the biggest round of funding ever by an Indian e-commerce firm.  

“In line with the Indian government's vision to promote inclusion, we are committed to transforming the lives of hundreds of millions of Indian consumers and merchants by providing them access to a broad array of financial services, including mobile payments. We are excited to partner with in this journey and will provide them with all our support,” said Masayoshi Son, chairman and chief executive officer, Group Corp, in a statement.

Beating online marketplace major Flipkart’s recent $1.4-billion funding, One97 Communications, the parent company of both Payments and Mall, has managed to close this round at a valuation of $9 billion, putting it just $2 billion away from Flipkart.

*estimates; other investors (some stakes are not known) 	Intel Capital, K2 Global, Mountain Capital, Ratan Tata, SAIF Partners, Sapphire Ventures, Silicon Valley Bank, MediaTek
*estimates; other investors (some stakes are not known) Intel Capital, K2 Global, Mountain Capital, Ratan Tata, SAIF Partners, Sapphire Ventures, Silicon Valley Bank, MediaTek
According to sources, has invested $1.4 billion directly in the company, and the rest it has spent on buying One97’s secondary shares. will directly hold a 20 per cent stake in the company, while it would gain 12 per cent by virtue of being a major shareholder in Alibaba, the Chinese internet giant that has a stake in One97. Alibaba’s shareholding in One97 technically will go down to 29 per cent from 41 per cent, while founder and Chief Executive Officer Vijay Shekhar Sharma’s shareholding might remain the same at around 19 per cent.

“We are at an inflection point in our journey with This investment by and support of the incredible entrepreneur is a great endorsement of our team's execution and vision. We believe we have a great opportunity to bring financial inclusion to half a billion Indians,” Sharma said in a statement.

Sources said this investment by would not only fuel the company’s expansion plans, but help it get rid of the “Chinese company” tag because of its association with Alibaba, a reputation that its rivals and detractors used to derail its growth during demonetisation. They even alleged that the country’s data were at risk.

Paytm, which had its back-end infrastructure ready for its payments after demonetisation, used it to fuel its massive growth in the past six months. 

“Now that is the major stakeholder, the whole debate around being Indian or not should be finally laid to rest. is planning to invest in Flipkart as well anyway,” said a source close to the company. 

This investment, according to the company, will help expand its user base and build a suite of financial services products for its users. The company on Wednesday announced that it would launch its payments on May 23.

plans to invest Rs 10,000 crore (approximately $1.6 billion) over the next three to five years.

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Paytm, launched in August 2010 as an and bill payments platform, soon expanded into ubiquitous online and offline use-cases. In January 2014, it launched Wallet, which has emerged as India’s biggest wallet with over 220 million users and more than five million offline merchants across

is headquartered in Noida, and its other investors include Ant Financial (Alipay), SAIF Partners and Mediatek.

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