SoftBank Group, the Japanase tech behemoth, has helped shape the fledging startup ecosystem of India in the past year. Under the leadership of former executive Nikesh Arora, the company entered the country with a bold outlook and a buttload of cash. It has already seeded heavy investments in startups like Ola, Snapdeal and hike among others.
Continuing its association with India, SoftBank is reportedly looking to invest in Kunal Shah’s digital wallet service FreeCharge. This development was first reported by ETTech.
As per the report, SoftBank is looking to invest around $150 to $200 million, along with support from other investors in the startup. With this funding round, the payments startup could be valued at $700 to $1 billion, making it one of the very few startups with such rich valuation.
One person aware of the development has said that the company’s founders are eyeing a valuation of between $900 million – $1 billion. He also said that potential investors could buy stakes of 15%-25% in Freecharge.
In India, SoftBank’s investments include $627 million in online-retailing marketplace Snapdeal and a $210 million funding round in taxi-hailing app Ola Cabs. It has also invested in InMobi and hike, among other startups in India.
FreeCharge, which enables online payments of utility bills and payments for purchases on Snapdeal, has been aggressively pushing into offline payments at restaurants and retail outlets. The company is aiming for 7 million daily transactions worth Rs 20,000 crore in 2016-17.
The company was founded by Kunal Shah and Snadeep Tandon in 2010 as an online portal for mobile recharge. With time, the company grew beyond recharge portal and was later acquired by Snapdeal in the year 2015. So far, it has raised around $115 million in two funding rounds from 5 investors.
One of the biggest competitor of FreeCharge is Paytm, which is backed by Chinese e-commerce giant Alibaba. Paytm, which is currently leading the digital wallet market in India, is soon going to launch its payments bank company. With Paytm’s recent fund raising activity, the company is now valued at approx. $4.8 billion.
Apart from Paytm, other players in this segment includes MobiKwik, Oxigen Wallet, etc. Mobikwik has recently raised around $40 million in strategic investment Net1 UEPS Technologies. Citrus Pay, a promising payment gateway service provider, has been acquired by PayU for $130 million.
According to a study by Boston Consulting Group, digital payments in India are expected to reach $500 billion by 2020, with customers’ payments to merchants driving this growth.