SoftBank Group, Ant Financial likely to invest $2 billion in Paytm

Paytm has in a decade become India's biggest digital-payments brand.

Fintech major Paytm is close to scoring $2 billion of new financing from investors, including Jack Ma's Ant Financial and Japan’s SoftBank Group Corp, to fend off an influx of new rivals, a person familiar with the matter said.

The funding will be split evenly between equity and debt and values the country’s top online financial services firm at $16 billion, the person said, asking not to be identified talking about a private deal. The talks are in their final stages but the terms could still change, the person added.

If a deal is finalised, Paytm could outstrip fellow high-profile Asian start-ups such as Grab and Gojek in valuation.

Billionaire Paytm founder Vijay Shekhar Sharma is raising capital to protect the start-up’s share of a potentially $1 trillion Indian payments market from new entrants, including Facebook, Alphabet's Google and Walmart-owned Flipkart's PhonePe. Over the past year, a string of new apps have made payments increasingly easy, bringing discounts and cash bonuses to young, smartphone-savvy users.

Credit Suisse Group AG now estimates that the Indian digital payments market will touch $1 trillion by 2023 from about $200 billion currently. It's a market with huge potential: Cash still accounts for 70 per cent of all Indian transactions by value, according to Credit Suisse, and neighboring China is far more advanced with a mobile payments market worth more than $5 trillion.

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Paytm, which is also backed by Alibaba Group Holding, declined to comment in response to emailed questions. SoftBank wasn't immediately available for comment during a Japanese national holiday. Ant had no immediate comment when contacted.

Paytm has in a decade become India's biggest digital-payments brand, attracting big names in investing from Ma and SoftBank Founder Masayoshi Son to Warren Buffett. Paytm's Sharma got a huge boost in 2016 after India's government moved to eliminate most of the nation's paper money in circulation in a bid to curb corruption. His start-up, a pioneer in the country's nascent field, saw tens of millions of consumers and hundreds of thousands of businesses sign up for digital services in a matter of months.