In what will mark possibly the biggest fund-raise for 2019, Paytm is in talks to close a $2bn financing round at a valuation ranging between $16 bn to $18 bn. The development has been reported by Economic Times, citing sources aware of the matter. The digital payments upstart is looking to raise this money from existing investors SoftBank Vision Fund and Alibaba’s financial affiliate Ant Financial.
Paytm’s last major investment was a headline in itself, since it saw Warren Buffet’s Berkshire Hathway investing $300mn into the company. The round valued Paytm at $10bn. The transit from a $10bn valuation to $16bn is reportedly because of internal transfer of shares that has happened within the company. This secondary share sale however, hasn’t resulted in the company getting any money.
“While SoftBank and Ant Financial capital is already in, the company is engaging with other investors and may look to take the round to as much as $2 billion. But it is most likely to be an internal round,” said one of the persons cited in the ET report.
In terms of the company’s current share-holding pattern, Softbank holds a 19% stake in the company. Alibaba and its affiliate Ant Financial hold 38% of the company.
The current round, when completed, hold significance for all of the involved stakeholders. For Paytm, this is much needed capital since it is embroiled in a two-faced war. While it fights Flipkart’s PhonePe and Google Pay on one end (both have claimed similar transaction numbers when compared with Paytm), it is also fighting an ecommerce war that the company entered pretty late. Ecomemrce however, isn’t really a priority now with the vertical pulled back quite a bit.
For Alibaba’s Ant Financial, Paytm is one of the investments which the company is expecting will bear fruits. While its planned IPO didn’t really take off, it still need to show strong growth of its investments, specially in emerging markets like India.