Paytm’s valuation may jump to $10 bn after share sale to new investors: Report

Digital payments firm Paytm, operated by Noida-headquartered One97 Communications Ltd, is likely to see its valuation jump to $10 billion after selling secondary shares to new investors, Mint reported citing three people aware of the development.

The above-mentioned persons stated that existing and former Paytm employees will offload part of their stake worth $50-70 million.

According to the report, Canada-headquartered Discovery Capital is among the new investors. Information about the identity and number of other investors was not available.

E-mail queries sent to Paytm and Discovery Capital seeking more information in this regard did not elicit a response at the time of publishing this report.

If the secondary share sale does materialise, it would mean a 43% rise in Paytm’s valuation from its last publicly-known valution figures.

The firm was reportedly valued at more than $7 billion when it raised $1.4 billion from Japan’s SoftBank Group last May. Its other investors include SAIF Partners, Alibaba Holding Ltd and Ant Financial Services Group.

Before that mega funding round, Paytm was valued at $4.8 billion as per VCCircle estimates when it raised an undisclosed amount from Mountain Capital in August 2016.

A $10 billion valuation would also mean that Paytm remains the second-most valuable Indian internet startup after e-commerce firm Flipkart.

Last April, Flipkart was valued at $11.6 billion when it raised $1.4 billion from Tencent, eBay and Microsoft. However, there have been some fluctations in its valuation since then.

In a valuation mark-up exercise in July, US-based investment firm Vanguard Group had pegged the valuation of Flipkart at around $13.7 billion. But in November, Valic, another mutual fund investor had marked down the valuation of Flipkart to $7.9 billion. The Mint report has pegged the e-commerce firm’s valuation at $12.6 billion.

Paytm’s expansion
Paytm had an eventful 2017 on the back of a massive spurt in cashless payments after the government’s decision in late-2016 to do away with 86% of the currency in circulation.

It has since sought to diversify its business from a mobile recharge and digital wallet platform and its now looking to become a full-stack player in the payments space.

The company launched e-commerce marketplace Paytm Mall last February. Three months later, it started Paytm Payments Bank. Earlier this month, it announced the launch of investment arm Paytm Money.

In November last year, the company announced that it would invest close to Rs 5,000 crore ($769 million) in its payments business over the next three years.

Last September, media reports had suggested that e-commerce marketplace Paytm Mall had begun discussions to raise Rs 3,000-4,000 crore ($456-608 million) in fresh funding.

Augmenting its payments bank business will be one of Paytm’s priorities in 2018. Renu Satti, managing director and chief executive officer of Paytm Payments Bank, told VCCircle last October that the firm would invest $500 million into beefing up its KYC compliance and adherence mechanisms.

In a recent interaction with news portal Inc42, Paytm founder Vijay Shekhar Sharma suggested that Paytm could foray into hyperlocal logistics and cloud services.

In addition, Paytm will also handhold startups by launching a startup incubator. It will focus on education, financial inclusion, digital lifestyle and emerging technologies such as machine learning, virtual reality and augmented reality.