Word On The Street: Paytm Money Eyes Mega $1.2 Bn Fund Raise

Paytm Money, the wholly-owned subsidiary of Paytm, is reportedly planning to raise as much as $1.2 Bn in its first mega funding round. With this, the company is planning to expand its services in the mutual fund (MF), insurance, and financial services segments.

A report said that several investors including Paytm’s current financial backers SoftBank and Alibaba-affiliate Ant Financial, are interested in the funding round. The funding could value Paytm at $5 Bn and is expected to close within 3 months, added the report.

Independent checks by Inc42 revealed that the company is not yet close to finalising any such mammoth funding round.

Till now, the Paytm Money has never had a funding round of its own, making it a wholly-owned subsidiary of Paytm. It was operating on the $10 Mn commitment from its parent company.

Exploring The Insurance Sector

There have also been reports on Paytm aiming at the acquisition of a major insurance marketplace and has set aside as much as $150 Mn for the purpose — a June report had said that Paytm was in talks to acquire insurance marketplace Coverfox for $100-120 million.

If the deal is finalised, Paytm will have all eyes on positioning itself as one of the largest competitors for insurance marketplace Policybazaar. Here, the involvement of SoftBank Vision Fund, the common shareholder in Paytm parent One97 Communications and PolicyBazaar may pose challenges to the deal.

Coverfox was founded in 2013 by Devendra Rane and Varun Dua (exited). It uses proprietary technology and algorithm-based platform to help its users to compare and buy a range of policies across top insurance companies. It claims to have integrated with more than 35 insurers and offers more than 150 policies in motor, life and health insurance. Last year in April, the company had  had raised $22 Mn in a Series C funding round led by IFC, a member of the World Bank Group; Transamerica and other existing investors.

If the funding round of Paytm Money and the acquisition of Coverfox takes place, Paytm will be looking to garner more customers in the insurance space and further strengthen its brand. Last year, it had included two insurance companies, Paytm Life Insurance Corporation Ltd and Paytm General Insurance Corporation Ltd.

Paytm’s initiatives to expand into the insurance sector through Paytm Money comes at a time when a report by Boston Consulting Group and Google predicts that the Indian online insurance industry will cross $2.8 Bn (INR 20,000 Cr) by 2020. The report said that the internet has had a high influence on the purchase decisions and in some categories, digital influence can already be compared to more matured markets, whereas in the insurance sector, online life and travel insurances have picked up substantial grounds.