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Softbank in talks with Paytm to lead fresh round of $500 mn funding

November 28
11:22 2017

E-commerce verticle Paytm Mall has held initial talks with Japenese conglomerate Softbank for leading a USD 500-600 million financing round, Times of India reported.

Softbank is planning to invest about USD 300 million into Paytm Mall, which is in competition with other online marketplaces like Amazon and Flipkart, two people who are aware of the matter told the paper on conditions of anonymity.

They added that the funding proposal is yet to be discussed with the company board, though informal commitments have come through from investors.

“They still need to set a valuation for the transaction as the initial capital from Alibaba and SAIF was an internal round,” sources told the paper.

Currently, the Jack Ma-led Alibaba group holds over 50 percent stake in Paytm Mall, which is also in talks with US investors for participation in the round, sources said, adding that the financing may come through by early next year.

In March, Paytm Mall received USD 200 million from the Alibaba group and venture fund SAIF Partners (also an investor in the parent One97), following which the e-commerce marketplace weeded out about 85,000 sellers in order to raise quality standards on its new platform

The move will be another step by Softbank towards capturing India’s e-commerce market as it has infused massive fund of USD 100 billion in the Bangalore-based Flipkart via its Vision Fund, making it the largest shareholder in Flipkart.

Also Read: Softbank’s Vision Fund invests in Flipkart, becomes largest shareholder in the firm

If the deals get through, Softbank will hold major stakes in the two close rivals — Flipkart and Paytm Mall. A person close the development said, “SoftBank’s potential investment in Paytm Mall is unlikely to have any conflict of interest with Flipkart, as the business models and the target consumer groups differ vastly.”

The company already holds the largest share in Sanpdeal, another Indian e-commerce company, which decided to terminate merger talks with Flipkart earlier this year.

Also Read: Paytm Mall revamps seller platform to focus on quality; delists 85,000 vendors

In July, Softbank also acquired 20 percent stake in Paytm’s parent company One97 Communications, which also runs Paytm Mall as an independent entity. Softbank had committed to fund digital payments arm Paytm with USD 1.4 billion, which the company plans to for its expansion.

One97 Communications founder & CEO Vijay Shekhar Sharma did not comment on this issue, while a spokesperson for SoftBank said, “We can’t comment on speculation.”

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