The competition frenzy in digital payment market seems to be forcing Paytm to fill up its cash coffers. According to Economic Times (ET), India’s largest digital payment company is in talks to raise $1.5-2 billion from two of its biggest existing investors – Ant Financials & SoftBank.
ET claimed, after citing sources, that the Gurugram based startup is also talking with external investors but the funding is most likely to be an internal one.
The timing of this funding cannot be more conspicuous as Paytm’s deep-pocketed competitors are steadily closing on its leadership position. A cursory glance over last months estimated transaction is enough to highlight the competitive pressure on India’s largest digital payment company. While Paytm UPI clocked 221 million transactions last month Google and PhonePe were not behind with $180-$190 Mn each.
Vijay Shekhar Sharma helmed company also could not have overlooked that PhonePe is probably closing on a fresh funding round. Reports are already circulating in the industry that Walmart is looking for external investors to pump fresh funds in PhonePe. Moreover, PhonePe has been in thick of actions recently as its divestment from the parent company was approved only few days back.
The divestment and fresh funding will certainly help PhonePe to further sharpen its focus on its payment service. This lone factor should be good enough to send competition in the digital payment market to frenzy.
Paytm’s valuation likely to soar to $16-18 Bn
Sources claim that Paytm is likely to witness a quantum jump in its valuation if the ongoing funding talks do fructify. Sources are pegging company’s valuation to approximately $16-18 bn post-funding round. This is a massive jump from its last valuation of $10 bn after it raised $356 Mn from Berkshire Hathaway in August 2018.
The quantum jump in valuation will also make the Alibaba backed company India’s second most valued company, after Flipkart. However, this may not necessarily propel the company towards an IPO issue.
Separately, Paytm’s independent e-commerce entity Paytm Mall is also trying to raise fresh funds but at lower valuation. The downsize in valuation clearly makes for the case that not everything is honky dory in the e-commerce.