Paytm is close to scoring $2 billion of new financing from investors including Alibaba’s Ant Financial and SoftBank Group Corp., Bloomberg reported citing a person familiar with the matter.
Discovery Capital Management is also considering joining a funding round that values India’s top online financial services firm at $16 billion, an anonymous source told Bloomberg. The funding will be split evenly between equity and debt and aims at helping Paytm fend off rivals, the person said, adding that the talks are in their final stages but the terms could still change.
The payments market is especially lucrative for the company. In India, digital payments have climbed more than five times since 2015 to 22.4 transactions per person in the year ended March, the Reserve Bank of India’s data shows. Paytm founder Vijay Shekhar Sharma is raising capital to protect his company’s hold on India’s potentially $1 trillion digital payments market from newer entrants like Google Pay and PhonePe. Meanwhile there is strong support from the Indian government to increase the proliferation of digital payments.
Ant Financial, China’s largest provider of internet financial services and one of Paytm’s earliest backers, has said it will continue investing in mobile-payment providers around the world to boost offshore revenue and buttress itself against rising competition and tighter regulation at home.
At present, Paytm has no plan for an initial public offering and will only consider it after 2021 when it is expected to generate positive cash flow, Sharma said.