SoftBank Puts Cash in Paytm -- WSJ

By Newley Purnell and Mayumi Negishi Features Dow Jones Newswires

SoftBank Group Corp. is plowing more than $1.5 billion into a fast-growing Indian mobile-payment company, people familiar with the matter said, as the Japanese internet and telecom titan chases new deals in emerging technologies. The deal could be announced as early as next week.

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Paytm makes a popular smartphone app that can be used to pay for goods and services spanning groceries to auto-rickshaw rides. The Noida, India-based firm said it has 218 million mobile wallets on its platform. That is a 45% increase from last year when the government cracked down on cash by nullifying its largest-denomination notes, in a bid to root out corruption and tax evasion.

That move triggered a cash shortage and accelerated the adoption of Paytm and other smaller payment services in the populous country, where millions of people are getting online for the first time via inexpensive smartphones -- and increasingly paying for goods digitally rather than with checks or credit cards.

"The addressable market is immense in a country like India," said Shiv Putcha, a telecommunications analyst at research firm IDC.

Paytm could use the money to hire armies of sales staff and customer-service personnel to extend its reach, tapping new users and signing up new merchants across the country, he said.

The company could also use the money to expand into new products like insurance, one of the people familiar with Paytm's plans said.

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Paytm "has the potential to become the Tencent or Alibaba of India," said Jayanth Kolla, founder of research firm Convergence Catalyst, referring to the Chinese tech giants.

The investment will give SoftBank a 20% stake in Paytm's parent company One97 Communications, one of the people familiar with the deal said, and marks its single largest investment in an Indian tech firm.

The cash infusion represents a shift in SoftBank's strategy in India, according to one of the people. Under Nikesh Arora, who last year stepped down as Softbank's president, the company invested hundreds of millions of dollars across a variety of Indian e-commerce, taxi-hailing and real-estate startups.

Now, as SoftBank Chief Executive Masayoshi Son assembles a $100 billion fund in an attempt to become the world's biggest investor in technology in the next decade, the company is placing bigger bets on firms it believes are well- positioned to win in crowded markets, the person said. The Paytm investment is part of the soon-to-launch fund.

Paytm's earlier investors include Chinese tech giant Alibaba Group Holding Ltd., which last month poured an additional $177 million into Paytm's recently launched e-commerce arm. In 2015, the company and its financial-services affiliate Zhejiang Ant Small & Micro Financial Services Group invested more than $500 million for a 40% stake in One97 Communications.

Last year, SoftBank closed a $32 billion deal to buy U.K. chip designer ARM Holdings PLC, a key supplier of chip architecture for mobile phones.

Write to Newley Purnell at newley.purnell @wsj.com and Mayumi Negishi at mayumi.negishi@wsj.com

(END) Dow Jones Newswires

May 01, 2017 02:47 ET (06:47 GMT)