Japan’s Softbank, the investor in the Paytm, has laid down new norms, as a part of the latest funding round to be done by T Rowe, Ant Fin, and Softbank. T Rowe is likely to invest $150-$200 million in Paytm and total funds to be raised are close to $1Billion, as per source from Economic Times.
The company should go public in the next 5 years, else, Softbank has a right to sell its stake to a rival company.
As per the report, it is mention that the Paytm has reached such a stage, where it needs to find a way to increase revenue and bring profitability. The Paytm lately facing stiff competition from Walmart Phone-Pe and Google Tej. The next big threat is coming from Facebook backed Watsapp wallet, which is slated to hit the Indian market by next year.
We at UnlistedZone viewed this as a necessary step, to avoid failure, such has happened in We-Work, where Softbank has a considerable investment. The We -Work IPO plans have failed miserably and its valuation has come down from $57 Billion to $8 Billion in just 3-4 months and has resulted in the loss of $4Billion to Softbank. The Fin-Tech companies can’t go alone on funding and must generate free-cash from the business to sustain in the longer run. Now all eyes would be on Vijay Shekhar, Founder of Paytm, as to how he will come out with the solution in the highly competitive environment to make Paytm profitable, which has shown a loss of ~Rs. 4000 cr in FY18-19. The challenge is huge. On one side you need growth and other side profitability. The next 1-2 years is make and break for Paytm.