One97 Communications Ltd, which operates Paytm, said on Monday it has raised $1 billion from new and existing investors, including Japan’s SoftBank Group and China’s Ant Financial. Paytm has been in talks since the start of this year to raise funds amid mounting losses, growing competition in the digital payments sector and no clear source of revenue growth path to monetize its customer base.
The company said the new financing round, dubbed Series G, was led by U.S. asset manager T Rowe Price. Existing investors Ant Financials (contributed $400 million), SoftBank Vision Fund (contributed $200 million), and Discovery Capital also participated in the round, which valued the company at about $16 billion — higher than any other local startup and some of the high-profile Asian startups such as Grab and Gojek.
Paytm mobile wallet enables users to transfer money to each other, pay for food delivery and clear utility bills, buy train and movie tickets as well as secure small loans. One97 Communications, which operates Paytm, has raised more than $3.3 billion to date.
Paytm plans to invest ₹10,000 crores over the next three years to bring financial inclusion to more under-served users across India.
Paytm founder and chief executive Vijay Shekhar Sharma said the firm will use the fresh capital to court merchants as the company looks to expand its presence among small and medium-sized businesses. The company will also work on expanding its financial offerings such as lending and insurance. Paytm, which also offers its mobile wallet service in Japan, has amassed 15 million merchants, most of whom have come online in recent years, in India, he said.
“This new investment by our current and new investors is a reaffirmation of our commitment to serving Indians with new-age financial services,” he said.
In India, digital payments have climbed more than five times since 2015 to 22.4 transactions per person in the year ended 31 March, Reserve Bank of India figures show. The market is expected to expand to $1 trillion by 2023, according to a report by NITI Aayog last year.
Paytm is trying to become a comprehensive financial services firm to improve margins but has struggled to expand its payments bank and other businesses. According to reports, Japan’s SoftBank has been pressing Paytm to accelerate its spending cut and find new revenue streams.
Paytm is locked in a market share war in digital payments with Google Pay and PhonePe. Once the clear market leader, the digital payments company has fallen behind its two rivals in UPI transactions.