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PayTm looks for a massive $350 Mn fund-raise from MediaTek, Goldman Sachs, Temasek and existing investors

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After a subdued action in the first half, we are finally seeing some rapid funding activity among India’s more established startups. After carving out a separate ecommerce entity for running payments and other businesses as separate units, Paytm is now looking to get funds — and at a massive scale — for its latest subsidiary.

According to a Livemint report, the new funding round can take value Paytm in the vicinity of $5 billion.  It of course could go well beyond that. This will be more than double the $2 billion valuation during the last funding round of the company in May last year.

The report cited three people familiar with the development who requested anonymity. They revealed that existing investors Alibaba Group and SAIF Partners will also participate in the round. Other new investors could be Taiwan-based Foxconn and Singapore’s sovereign fund GIC Pte.

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The company and investors are reportedly working on final deal structure and will finalize the deal in next 1-2 months. In this funding round, what is interesting is the entry of chipmaker MediaTek Inc as an investor.

This is because MediaTek recently invested in the rival company of PayTm, MobiKwik in May this year. However, PayTm has much bigger plans with MediaTek. It is reportedly planning to pre-install its app in MediaTek based smartphones.

As per Bloomberg, MediaTek is ahead of its rivals like Qualcomm in India and has 35% of market share for processors in India. This makes it an attractive proposition for PayTm to expand its app.

The latest round will also see participation from Alibaba Group which has more than 40% stake in the company. This time, the firm may invest directly into One97, the parent company of PayTm or may buy a stake in upcoming Paytm Payment Bank or Paytm E-commerce.

Notably, Alibaba and its financial arm, Ant Financials invested a little less than $1 billion in PayTm last year. Talking about same, an Alibaba spokesperson said in an email to Mint,

Paytm is an important strategic partner of Alibaba Group and Ant Financials and we will continue to support and work closely with Paytm. It is our common goal to provide equal access to financial services in India, China and around the world.

The company is reportedly also eyeing expansion outside India in the Western Europe and U.S. markets. More importantly, the latest funding can also support its new spin-off entity for the e-commerce marketplace. The company s already in penultimate stages of launching a payments bank, and has already invested close to 350 crores in the same.

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The new independent ecommerce entity could help Alibaba gain a strong foothold when it enters the Indian e-commerce arena to take on Flipkart, Amazon, and others. Alibaba is also reportedly planning to acquire another Indian e-commerce firm Shopclues for strengthening its position further.

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