Published: Sat, May 20, 2017
Markets | By Noel Gibbs

Indian fintech company Paytm raises $1.4 billion from Japan's SoftBank (9984)

Indian fintech company Paytm raises $1.4 billion from Japan's SoftBank (9984)

If that deal goes through, SoftBank will have stakes in both of India's largest internet companies - Paytm and Flipkart.

With this one-time investment of United States dollars 1.4 billion, SoftBank will hold a 20 percent direct stake in Paytm, along with a 12 percent indirect holding through its majority stake in Alibaba, the Chinese internet giant that has 40 percent stake in One97, Paytm's parent company.

Indian mobile payment platform Paytm has raised $1.4bn from Japan's SoftBank in latest funding round.

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Speaking on the occasion, Founder & CEO, Paytm, Vijay Shekhar Sharma said, "We are at an inflection point in our journey with Paytm".

Paytm, which runs India's biggest digital payments system with more than 220 million users, said it planned to spend 100bil rupees (RM6.49bil) over the next three to five years to expand its services.

TOI had reported in its April 19 edition that SoftBank was in talks with Paytm for an investment topping $ 1 billion. "As a part of this vision, the company will soon launch the Paytm Payments Bank, a mobile-first product that will reach every corner of the nation, and focus on the millions of unserved and under-served Indians", the company statement said.

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SoftBank's wager on Paytm comes at a time when it is consolidating its India bets and putting its weight behind category leaders in the cash-guzzling consumer internet sector. It also includes purchase of a minor stake from Paytm founder Vijay Shekhar Sharma.

Paytm's zero cost QR Code-based payment solution has been adopted by millions of merchants and has become synonymous to digital payments in India. It would also expand its user base and build a suite of financial services products for its users. "We are excited to partner with Paytm in this journey and will provide them with all our support", said Masayoshi Son, chairman and chief executive officer, SoftBank Group Corp, in a statement.

In addition to seeking to solidify its lead in digital payments, Paytm, founded in 2010, is aiming to launch a payments bank, an institution that can take deposits and remittances but cannot lend.

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Paytm on Wednesday said it will finally launch the operations of its payments bank on May 23. Accel Partners is an early investor in Flipkart. One of the biggest gainers of that demonetization was a start-up called Paytm, who via persistent advertising were already gaining popularity as a cashless app or mobile wallet in the Indian market.

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