Softbank-backed Paytm raises $1bn in further funding
Softbank seeks to restore its reputation in technology investing
Paytm, an Indian digital payments company, has raised around $1bn (£780m, €910m) in its latest fundraising round. Existing backers, such the Chinese group Ant Financial Services and the Japanese conglomerate Softbank are said to have contributed further in the deal, which now values the firm at $16bn.
Vijay Shekhar Sharma, Paytm’s founder and chief executive stated: “This new investment by our current and new investors is a reaffirmation of our commitment to serve Indians with new-age financial services.”
India’s large population explains Paytm’s large valuation. Founded in 2010, the e-commerce and fintech company seeks to offer banking services to millions of Indians, many of whom do not currently use digital banking.
The financial technology industry has increasingly sought to cater to the great ‘unbanked’ populations of the earth. While many companies, such as Facebook and Monzo, have declared their desire to ‘democratise’ financial services, there is also a significant profit motive in increasing one’s potential customer base.
Paytm has over 350 million registered and is available in 11 Indian languages. It allows users to organise scheduled bill payments and also to make in-store payments at grocers, restaurants, pharmacies and small shops with its Paytm QR code.
The company has expressed its ambition to more than double its transaction volume from 5.5 billion transactions in the financial year 2018-19 to 12 billion 2019-20.
The acquisition comes as Softbank has come under increased scrutiny for recent financial decisions. The Japanese investment firm, through its Saudi-backed Vision Fun, invested heavily in the office space sharing start-up WeWork.
The ongoing uncertainty at WeWork has caused SoftBank to report its first quarterly loss since 2005 and has thus far cost $8.9bn (£6.9bn, €8bn). Earlier this month, Softbank founder Masayoshi Son admitted: “I had shut my eyes to WeWork's troubles”.
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