Huge capital flows have been raining into the startup industry of the country. This is followed by a dry spell that occurred in the country during the last year. Last week, Flipkart had announced that it would raise around $1.4 billion from the overseas investors. It is now time for another startup to follow the funding league. Paytm – a fintech startup promoted by Vijay Shekhar Sharma too hopes to raise around $1.2 – $1.5 billion for its company.
The startup has been in talks with the Japan’s SoftBank for the last 3 months. The deal can foresee the company buying shares from the current investors of Paytm. The shares can be bought from the founder Vijay Shekhar Sharma and SAIF Partners.
There could be several lucrative options once the fund raising gets approved. It could escalate the valuation of Paytm to around $7-$9 billion. Until March, this valuation was around $6 billion. However, the valuations of several leading companies have downgraded in the recent times. Recently, Flipkart’s valuation went down from $15.2 billion to $11.6 billion last week. Ola too witnessed around 40% drop in the valuation. This happened to $3 billion from the previous $5 billion.
Paytm is keen on raising funds from SoftBank. This will help the company to reduce the control of Alibaba Group. Alibaba Group is the largest stakeholder in the company. In addition to this, to get SoftBank as the largest shareholder can also allay the concerns of the government. For SoftBank, the collaboration with Paytm can expand its presence in the e-commerce market of the country.
The founders of Snapdeal and the Japanese investors are currently in conversation. They are communicating with Flipkart to sell the company. Last week, SoftBank funded Flipkart in return for a stake. There are several rounds of fund infusion taking place in One97. Thus, the Japanese investors will have a significant presence in the e-commerce market of the country.
SoftBank has been planning since last year to sell Snapdeal to Flipkart. It also plans to sell FreeCharge to Paytm. These have taken in return for the stake ownership in these companies.
The funding is supposed to help Paytm in accelerating the expansion plans. This will occur prior to the launch of the payments bank services.