According to sources, SoftBank in going to invest a huge amount One97 Communications, parent company of recharge portal Paytm. The investment would mark this Noida based company at over $7 billion.
Softbank Hopes For Stakes Of The Company
If the deal is successful, this Japanese giant will have major share in two of the country’s biggest online business as they are already in talks with Flipkart over Snapdeal’s acquisition.
As per one of the informer, One97, which possesses Paytm, India’s biggest digital payment platform, is looking for a higher valuation of almost $8 billion. Well it is looking for a proposed speculation of $1.4 billion to $1.9 billion. However, SoftBank is looking for a 20% stake in the company.
Deal Yet To Be Finalized
Well the spokesperson also said that,” A potential transaction is still a few months away” with the additional statement that the deal is yet to be finalized. However, Softbank and Paytm have declined to comment.
The Biggest Deal In E-commerce Space
Masayoshi Son led company is handling the sale of Snapdeal, it’s portfolio company, to Flipkart. This deal would bring a great change in the e-commerce world. Previously it was already revealed that Softbank Broaches for Snapdeal Sale, would be one of the biggest deal in Indian Ecommerce system.
Selling Out Freecharge
As one of the informers said that, SoftBank’s foremost need is to finalize the negotiations with Flipkart. While negotiating with Paytm, it is also concerned towards the sale of FreeCharge which is the advanced Payment segment of Snapdeal. Well it has been declared in previous article “Softbank about to sell E-Wallet Freecharge For 200 Mn at 50% Discounts”, which reveals that process of Freecharge sell has been already initiated by Softbank.
This three way negotiation is aiming to consolidate the Indian investment of Japanese giant SoftBank which is close to $2 billion.
Vision Of Softbank Vision Fund
Alibaba, biggest capitalist in Chinese ecommerce marketplace, is seeking to rebuild the success in Indian marketplace with purchasing of stakes in Flipkart and Paytm. Experts have perspective that Softbank which had propelled SoftBank Vision Fund (a $100 billion fund) in year 2016 sponsored by Saudi Arabia’s Sovereign wealth fund and it should aggressively look for stakes in the top startups of the country.
One of the spokesperson said that, “If (SoftBank) is really going to bet long term on India and put the kind of money (it) can, then you should go for top players in the market”.
Softbank Won’t Get Stake From Snapdeal-Paytm Deal
SoftBank has contributed nearly $900 million in Jasper Infotech that possesses and operates both Snapdeal and FreeCharge. Whereas, Son’s plan to pitch Snapdeal to Flipkart and FreeCharge to Paytm as an end-result of shares in both organizations. Well a merger of Snapdeal with Paytm E-trade which too has been investigated but won’t be able to provide SoftBank a stake in the business of the Vijay Shekhar Sharma established organization.
Shareholders Of Paytm E-Trade
One97 evolved its online business into a different element called Paytm E-trade, where currently Chinese giant investor, Alibaba also contributed $175 million. According to shareholding regulation, 49% of Paytm Payments Bank is owned by Noida based company whereas Sharma owns 51%.
Increment In One97 Valuation Leads Heavy Downfall For Others
This increased valuation of One97 is a direct result of other online companies facing a heavy downfall. Flipkart was esteemed at $11.6 billion a week ago, down from a pinnacle of $15.2 billion while Ola also experienced a 40% cut in valuation from $5 billion to $3 billion.
Other Funds Acquired By Paytm
After investment of Alibaba and Alipay, Paytm’s valuation remained at near Rs 15,260 crore or $2.3 billion in 2015 which has increased to $4.8 billion after it received a fund of $60 million from MediaTek which is a Taiwanese semiconductor firm in 2016.
Positive Impact Of Demonetization On Paytm
This rise in valuation of Paytm engendered due to demonetization in India last year in November month. As per Boston Consulting Group, the wholesome payment using digital modes are expected to touch $500 billion till 2020 in the country.
Paytm’s Major Services
Paytm has created a remarkable position in payment marketplace with more than 8 million transactions on daily basis including payments for food delivery on Swiggy, booking movie tickets, booking Uber rides, booking travel tickets, other than Mobile recharges. It has additionally pushed in the disconnected installments space using QR codes. Daily transaction at Paytm crosses the transaction at Mobikwik, which is affirmed is 3 million transactions, in double the counting.
Contenders Of Paytm
In nearby future, it will be confronted with contenders like Flipkart’s PhonePe, and Whatsapp. Recently, PhonePe is working with Tencent after gaining the latest funding round of investment. Some other contenders are also intruding in the competition like Reliance Jio, Truecaller, and incumbent bank.
Funding Will Decide Winners And Losers
With the competition getting tougher with every passing day, experts suggest that a strong offline plan and great capital would be the deciding factor for the winner. Vivek Belgavi, leader and partner of finitech at PwC India said that, “What will be the differentiator in the next few years is the offline payments space. But the acquisition of offline channel is costly, and the funding will pick out winners and losers”