Paytm parent in talks to raise $300m from MediaTek, others

NEW DELHI: One97 Communications, which runs e-commerce marketplace and payments platform Paytm, is in advance discussions to raise $300-$350 million (or ₹2,000- 2,400 crore) from Taiwan’s MediaTek, Temasek, Goldman Sachs and existing investors Alibaba Group and SAIF Partners, among others; according to three people close to the development.

Taiwan’s Foxconn and GIC are likely to participate too.

The deal, which is likely to get closed in another 30-60 days, is expected to value One97 at about $5 billion (post money), a jump of over two times over its last reported valuation of $2 billion in May 2015, the people cited above said on conditions of anonymity.

The investment from MediaTek, a Taiwanese chipmaker, will help Paytm in pre-bundling its mobile app in MediaTek chipset phones, said one of the three people mentioned above.

Paytm, Alibaba Group and Mediatek did not immediately respond to Mint’s email query. SAIF Partners declined to comment. MediaTek has around 35% of India’s market for processors used to power mobile phones, putting it ahead of global rivals including Qualcomm Inc. and Spreadtrum Communications Inc, according to Bloomberg .

In May, Mediatek also invested an undisclosed amount in Paytm’s smaller rival Mobikwik, run by One MobiKwik Systems. The increased investor interest in Paytm comes from the fact that India has paucity of payments solutions providers. Sharma was also one of the 11 recipients of a payments bank licence from the Reserve Bank of India (RBI).

Last year, China’s e-commerce giant Alibaba invested in Paytm expecting the company to become the biggest payment services provider on back of a large marketplace and by creating a web of affordable payment infrastructure even in the offline space, a model it follows in China.

In 2015, Alibaba and its affiliate Ant Financials invested less than $1 billion in Paytm. Paytm, founded by Vijay Shekhar Sharma, started out as a mobile payments and mobile recharges business but is today ranked among the top three consumer Internet start-ups in the country.

The company, at a group level, notched up close to ₹2,000 crore in gross merchandise value (GMV), or cost of goods and services sold) in the month of July, placing it right next to larger Internet rivals Flipkart and Amazon India.