Mumbai: Japan’s SofBank Group Corp, one of the world’s largest investors in startups, is considering major investments in upcoming Indian entities such as Paytm and online grocer BigBasket. The possibility comes on the heels of talks with Flipkart for a merger with Snapdeal, wherein SoftBank is a major stakeholder.
Fintech startup Paytm, is run by One97 Communications Ltd, and is particularly keen on building its relation with SoftBank. If the investment goes through, Paytm will be valued between $7 billion and $9 billion. Talks between the two entities have been ongoing for more than three months.
Apart from direct investments, Softbank is also looking buying shares from existing investors such as SAIF Partners as well as, from founder Vijay Shekhar Sharma. In turn, Paytm is exploring the possibility of taking over ‘freecharge’, a mobile recharge platform from Snapdeal.
If SoftBank is able to successfully infuse money into Paytm, it would make it one of the largest stakeholders in the latter. Currently, the title is held by Chinese online retailer Alibaba’s financial funding wing, Alipay. The elevation of SoftBank’s stake would also allay fears of a strong Chinese hold over a major Indian financial services firm.
This is, however, not the first time that SoftBank is considering making investments in Paytm. In 2014, it had passed up the opportunity to invest in the latter, instead opting for online retailer Snapdeal. SoftBank is now looking at selling Snapdeal, run by Jasper Infotech Pvt. Ltd., to Flipkart, a move that could result in the largest merger in the Indian online retail sector. Flipkart is said to have already
Apart from Paytm, SoftBank is also in the early stages of considering an investment in online grocer BigBasket, run by Supermarket Grocery Services Pvt. Ltd. The catch, however, is that SoftBank will only consider the investment if BigBasket agrees to a merger with smaller rival Grofers in which the bank already has a significant stake.
Alibinder Dhindsa, founder and chief executive of Grofers is reported by the mint as having said, “The team at Grofers is focused on executing on our long-term strategy and we are well capitalised for that with an investor set that supports the vision. We don’t need to make any strategic moves at this time.” However, BigBasket could definitely do with some extra funding.
While BigBasket is valued between $700-800 million, Grofers stands around $150-200 million. However, the former incurs an operating cost of $6 million every month and talks with current investors such as Wal-Mart Stores Inc, Amazon.com Inc, Tencent Holdings Ltd, and Fosun International Ltd haven’t made much headway. SoftBank’s investments could mean major shakeups for the Indian startups landscape.
Source: India.com
