Paytm bags in $1 Billion in funding

Paytm: An Indian e-commerce website, bags in $1 billion.

Paytm, a company based out of Noida, India, is one of the leading e-commerce payment and financial technology companies. It was founded in August 2010 by Vijay Shekhar Sharma with an initial investment of $2 million. Gaining popularity by each passing year, it launched the Paytm wallet in 2014. Aiding to its growth, Indian Railways and Uber added it as a payment option. It stepped into e-commerce in 2015 by providing online deals such as bus ticketing, education fees, metro recharges, and electricity, gas, and water bill payments.

Paytm kept on adding feathers to its hat by including features such as ticketing for amusement parks, movies as well as flights. Paytm’s registered user base grew from 11.8 million in August 2014 to 104 million in August 2015. Its travel business surpassed $500 million in annualized GMV run rate, as it was used to book 2 million tickets per month. 

The Big News

Paytm said on Monday that it has raised $1 billion in a financing round led by US asset manager T Rowe Price with existing investors Ant Financial and SoftBank Vision Fund also participating.

 “It’s a $1 billion raise led by T Rowe Price!!!,” said Vijay Shekhar Sharma, CEO of One97 Communications, Paytm’s parent company. “SoftBank has pumped in $200 million, while Ant Financial has invested $400 million at a $16 billion valuation.”

This resulted in an elevation of the total raised investment to $3.5 billion. The Founder and Chief executive Vijay Shekhar Sharma said that the capital raised will be used to court merchants, as the company is looking forward to expanding its presence among small- and medium-sized businesses. The company plans to expand its financial offerings such as lending and insurance. Adding to his points he said, “This new investment by our current and new investors is a reaffirmation of our commitment to serve Indians with new-age financial services.”

In the current scenario, India is turning into a payment arena for big names such as Google, Walmart, and Facebook. According to Credit Suisse, the digital payments market in India will be worth $1 trillion in the next four years, which is currently valued at about $200 billion.

Industry estimate shows that more than 100 million people in India use mobile payment services. The numbers went skyrocketing after Prime Minister Modi imposed demonetization.

Paytm has crossed its teenage!! 

“Our payment business is fairly mature now and is contribution breakeven, while commerce verticals are making some money,” Vijay said.

With more and more competition among digital payment players such as Google Pay, PhonePe, and Amazon-Pay Paytm began fundraising efforts to nearly $2 billion. 

“We have been the majority market shareholder of offline and online merchants,” he said dismissing threats from the above-mentioned competitors. “These people have been spending billions of dollars in the last two-three years but couldn’t even touch our payments business. We have been successful in not just protecting but increasing our market leadership.”

Conditions Imposed

SoftBank imposed new conditions on the company before investing in this funding round. They have stipulated that the Paytm should go public within five years from the time of completion of the transaction, failing which SoftBank will have the right to sell its stake to a rival company according to an ET (Economic Times) source.

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