Paytm to raise Rs 12,000 crore from Softbank in largest e-commerce funding

The funding, expected to materialise in 3 weeks, to help push firm's banking and finance investments

Alibaba-backed online marketplace company Paytm, which is in a rapid expansion mode, is in talks for a fresh round of funding for investment in banking and finance, besides other expansion plans. The company, it is learnt, is looking to raise around Rs 12,000 crore from Japan’s SoftBank, in the single-largest investment in an e-commerce company. 

The funding, it is believed, could materialise within the next three weeks, though Paytm Founder and Chief Executive Officer Vijay Shekhar Sharma did not comment on it. 
 
Paytm, in tie-up with MMTC’s Swiss venture PAMP SA, on Thursday launched a wealth-management platform that allows you to invest in gold for as low as Re 1, in the first such initiative anywhere in the world. It announced the launch of ‘Digital Gold’, a vertical to allow its 200-million plus users to buy, store and sell gold instantly. CEO Vijay Shekhar Sharma referred to the new offer as a wealth management product that would be part of its proposed payments bank, still awaiting a final nod from the Reserve Bank of India (RBI).

 

The company would need around Rs 10,000 crore of investments in banking and finance for over three years, Sharma pointed out. The company has been burning a lot of money as well while on the growth path. In the fourth quarter of FY2017, the company spent over $105 million on various projects, including expansion in Canada. Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account. To deepen financial inclusion in the country, the RBI had allowed small finance banks and payments banks to start services.
 
Sources said the company has also received interest from US-based high networth individuals for investing in the company. While Sharma did not comment on the discussions, he said there is interest from across geographies for putting in funds. Paytm has been one of the biggest beneficiaries of the government move to scrap old notes of Rs 500 and Rs 1,000. At present, Paytm operates a mobile wallet and e-commerce marketplace. With over 1.5-billion transactions on its platform, the company now aims to cross the 4.5-billion mark this year. “We have seen significant growth and this year too, we expect to see manifold growth to 4.5 billion. A significant part of this growth is coming from tier-II and beyond cities,” Sharma said.

 
“Customers can now buy and sell international quality gold at market-linked prices instantly for as low as Rs 1 using their Paytm wallets. If a user wants to sell the gold, MMTC-PAMP will buy the gold back and the money will be transferred to his bank account,” Sharma said, referring to the new wealth-managemrnt platform.
 
While the purchased gold can be stored in MMTC-PAMP’s secure vaults free of charge, a consumer can also request for home delivery of minted coins or sell it back online instantly. The company did not elaborate on this, but it may get into gold loans as well. It’s learnt to be already working on the plan. Estimates suggest gold worth $900 billion is stocked in homes and bank lockers in India. 

 
Sharma added that cities like Jaipur, Sonepat, Vijayawada, Visakhapatnam and Durgapur were among the fastest-growing for the company. At the end of March 2017, Paytm had 218-million mobile wallet users.