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Paytm Parent One97 Communications May Reach $16 Bn Valuation Via ESOPs Sale

Paytm Parent One97 Communications May Reach $16 Bn Valuation Via ESOPs Sale

After the Berkshire Deal, One97 Communications is now in talks with many US and Chinese investors

The company is looking for a potential sale of ESOPs worth $100 Mn-$200 Mn

Blackstone, Dragoneer are among a few investors in talks with One97 Communications

After securing $300 Mn from Berkshire Hathaway, it is expected that the valuation of One97 Communications, the parent company of digital payments platform Paytm will reach $16 Bn soon.

In May 2017, One97 Communications had raised $1.4 Bn at a pre-money valuation of $6.6 Bn. Later, in August this year, the company raised $300 Mn from Berkshire Hathaway, wherein its valuation was speculated to be $12 Bn.

According to reports, One97 Communications is currently in talks with investors from the US and China for a secondary sale of existing employees’ shares and small shareholders like MediaTek in the company. This transaction could be worth anywhere between $100 Mn-$200 Mn, the report added.

If successful, this would be third ESOPs exchange round for One97 Communications. In March 2017, around 47 of its employees sold shares worth about $13.4 Mn (INR 100 Cr) to investors, when it was valued at $4.8 Bn. Then, earlier this year, employees sold stakes worth $40.3 Mn (INR 300 Cr) to investors including hedge fund Discovery Capital.

Investors including Blackstone, US-based hedge fund Dragoneer Investment Group, several Chinese investment firms are reportedly in talks with the company for investment.

Blackstone Group is known for its investments such as Intelenet, Mphasis and FINO while Dragoneer has backed companies like Flipkart.

An email sent to One97 Communications did not elicit any response till the time of publication.

The Indian ecommerce industry is currently worth $200 Bn while the digital payments industry is expected to grow five-fold to reach $1 Tn by 2023, as predicted by Credit Suisse.

One97 Communications is currently diversifying its offerings in different segments under its brand name Paytm and its subsidiaries such as Paytm Mall, Paytm Money, Paytm Payments Bank, Paytm Inbox, among others.

Here’s a quick update on the latest happenings at Paytm:

  • The company recently partnered with SoftBank and Yahoo Japan’s newly launched digital payments company ‘PayPay’ to expand to Japan.
  • Paytm has also started offering forex services for the top 20 international currencies and may also enter cross-border remittance services space.
  • The company is looking at raising funds to build a new retail model to equip shopkeepers with technology, logistics, and marketing capabilities.
  • Paytm is testing using the facial recognition feature for unlocking the payments application, and plans to extend this feature to allow customers to pay at merchant outlets in a blink of an eye.
  • Paytm Labs, led by Harinder Takhar, is working on a mechanism to determine the “credibility score” of a person seeking a loan from the bank.
  • It has also started operating a mutual fund platform — Paytm Money — with 850K users.

One97 Communications is majorly competing with global players such as Amazon India and Amazon Pay, Google Tez and locals like Flipkart and its subsidiaries, particularly digital payments company PhonePe. It is now targeting to double its merchant base to 16 Mn.

Update: 18th October 2018, 10:30

The earlier version of the story had mentioned that Flipkart became a decacorn in 2018. The same has been rectified now.  

[The development was reported by ET]