SoftBank may just invest $1 billion in Paytm for Snapdeal merger

An all-stock merger of Snapdeal with Paytm is being discussed at the highest level, say sources

Masayoshi Son-led SoftBank, the largest investor in Snapdeal, is keeping its options open. While the Japanese major has been spearheading the talks for a possible merger of Snapdeal with Bengaluru-based Flipkart, sources said it was exploring a similar deal with Paytm.

An all-stock merger of Snapdeal with Paytm is being discussed at the highest level, sources pointed out. This could mean SoftBank investing in the Alibaba-backed wallet company. SoftBank is among the oldest investors in Alibaba. Talks have also been held on the possibility of SoftBank taking equity in Paytm for investments of close to $1 billion.    

SoftBank, which has been for the last three months trying to hammer out a deal to sell Snapdeal, is learnt to be in talks with Tiger Global to merge the Gurgaon-based marketplace with Flipkart. Tiger Global is a top investor in Flipkart. But people close to the developments said the deal could go either way — Snapdeal getting merged either with Flipkart or Paytm.   

SoftBank, when contacted, refused to comment on the issue. However, a source said digital payment was a lucrative space to be in for the bank. “If SoftBank manages to close the deal with Alibaba, it would get a stake in the country’s largest wallet,” the source said. 

Alibaba, which has a 40 per cent stake in Paytm, has invested close to $1 billion in the company. 

According to industry insiders, a deal with Paytm makes more sense for Snapdeal as there are synergies between the two ecommerce companies and have Alibaba as a common investor. “They both have a marketplace, a mobile wallet as well as Alibaba as a common investor. For SoftBank, it makes more sense to deal with the Chinese tech major in which it has considerable stake.’’

The wallet-major has a valuation of close to $6 billion and has a user base of over 200 million. 

According to recent reports, SoftBank, which has already written off the investments in Snapdeal, is in talks to invest $1 billion in Flipkart. As part of the deal, it could merge the Gurgaon online retailer with Flipkart. It is learnt to be getting on board Kalaari Capital and Nexus Venture Partners, both investors in Snapdeal, to hasten the sale.