Paytm today announced that it will receive an undisclosed amount of investment from Mountain Capital, one of Taiwan-based MediaTek’s investment funds. Reportedly, the amount invested is $60 million (about Rs 400 crore).
The payments and e-commerce company has raised the fresh funds at a valuation of about $5 billion, according to The Economic Times.
MediaTek Inc. is a semiconductor company and provider of system on chips (SoCs) for mobile devices, home entertainment, connectivity, and IoT products.
The company, which was founded by Vijay Shekhar Sharma in 2010, has so far raised more than $728 million. Today, with over 40 percent stake in the Noida-based company, Alibaba Group is the biggest stakeholder in the parent company One97 Communications. The other key investors include ANT Financial, SAIF Partners, and Intel Capital. The company had also attracted a round from Ratan Tata.
The fresh capital will allow Paytm to enhance payments, commerce, and financial services. It will also be used for expansion and scaling up, boosting payments and commerce, and building and launching the proposed Paytm Payments Bank.
In February this year, reports that Paytm was looking to raise $400 million by June to help with the launch of Paytm’s new payments business, Paytm Payments Bank, had surfaced, although this wasn’t confirmed by the payment major.
Commenting on the funding, Vijay Shekhar Sharma said,
“India is an important emerging market with immense potential for smartphone devices, mobile payments, commerce, and financial services. MediaTek’s endorsement on Paytm through Mountain Capital further demonstrates its confidence in the proliferation of India’s digital payments and mobile internet ecosystem. For Paytm, our mission is to bring half a billion Indians to the mainstream economy and we are happy to have a long-term partner in the mobile chipset world to join us. India is ripe for its financial services revolution and with the growing penetration of smartphones, we have an opportunity to give a new business model of payment, banking, and financial services combined with online commerce."
Recently, it was also reported that the company had been split into two separate entities — Paytm E-commerce Services and Paytm Payments Bank. Also, One97 Communications chief Vijay Shekhar Sharma would be the director of both the companies. This was apparently done so that Paytm’s marketplace could be merged with Alibaba’s when it forayed into the Indian market.
The company had earlier had also stated that it would have a host of sellers from China and Southeast Asia on its platform, which hinted that it plans to merge its e-commerce platform with Alibaba’s.
With Snapdeal-owned FreeCharge, which claims to have closed a million daily transactions in February this year, the competition has obviously intensified in the fintech space.
According to a Nielsen study in April this year, FreeCharge’s market share reached 30 percent from a mere 17 percent last October. The same study reported Paytm to have a market share of 40 percent, an increase from 35 percent since last October.
With this infused capital at this crucial juncture, Paytm has taken the game a notch higher in the finctech segment. Last week, another key player, MobiKwik where MediaTek has invested, also raised $40 million from Net 1 UEPS Technologies.