Paytm Money plans to raise $1.2 billion in a mega funding round

Vijay Shekhar Sharma, founder and CEO, Paytm
Paytm Money, the wholly-owned subsidiary of mobile wallet giant Paytm, is planning to raise as much as $1.2 billion in a mega funding round, said people in the know. According to them, the company is eyeing rapid expansion in the mutual fund (MF), insurance, and financial services space in 2019. It is believed this funding round will help it get the added traction.

The people said existing investors, including SoftBank Group and Alibaba’s financial affiliate Ant Financial, are interested in the round. They believe the next level of growth for One97 Communications — the parent company of Vijay Shekhar Sharma-led Paytm — will come from the financial services vertical. “Paytm has had preliminary discussion with investors. If the talks go through, then Paytm Money might raise at least a billion dollars. The online financial services platform has shown much potential in the last one year, and investors believe digitisation of financial services is the Next Big Thing,” said a person privy to the development.

Paytm, however, did not respond to a mail sent in this regard.

Paytm Money has not raised funds from outside investors. It has received a commitment of $10 million from its parent One97 Communications.

Although no timeline has been set, people in the know said the fund raise could happen within the next three months.  

After that, the company will target rapid expansion of financial services in tier-II and tier-III cities. If Paytm Money is able to raise close to a billion dollars, it will become yet another unicorn under One97 Communications. It is believed the funding round could be easily valued at $5 billion. Both Paytm Wallet and Paytm Mall are unicorns with valuations of $12 billion and $2 billion, respectively. Sharma has, till now, managed mega funding rounds for all his major ventures. In 2017, the company created quite a stir when SoftBank pumped in $1.4 billion, at a valuation of $8 billion.

Last year, One97 Commu­nications raised $300 million from Warren Buffett’s Berkshire Hathaway, taking its valuation close to $12 billion.

Further, there have been reports of Paytm being in talks with various insurance marketplaces for an acquisition. People in the know said Paytm might acquire a financial services firm in the run-up to the mega round.

“The company is planning to acquire a major insurance marketplace. This will help its expansion plans. Though the talks are still happening, Paytm has set aside as much as $150 million to close the deal,” said a person close to the development.

The direct MFs investment platform has partnered with close to 34 asset management companies. It has also brought rating agencies MorningStar, CRISIL, and Value Research on board. To drive wider adoption in smaller towns and cities, the firm supports investing from over 190 banks. The company has, over the last one year, invested in product, design, data science and machine-learning, to analyse users’ risk assessment, recommend advisory portfolios, and make investment recommendations that best suit individual users.