Japan’s telecom and internet conglomerate SoftBank is reportedly in talks with Alibaba-backed Indian e-wallet company PayTM to invest around $1 billion to $1.5 billion. The possible investment comes on the heels of talks with Flipkart for a merger with Snapdeal. Notably, SoftBank is a major stakeholder in Alibaba and Snapdeal both.
Surprisingly, an all-stock merger of Snapdeal with Paytm is being discussed at the highest level, said sources. This could mean SoftBank investing in PayTM, wherein China’s Alibaba — with 40% — is a maximum stakeholder, and SoftBank in turn is among the oldest investors in Alibaba.
Reliance Capital, who was one of the earliest investors in PayTM, had already sold its stake in One97 Communications — the parent company of digital payments provider Paytm — to Alibaba in a deal estimated Rs 275 crore
Apart from Paytm, SoftBank is also in the early stages of considering an investment in online grocer BigBasket provided that Supermarket Grocery Services Pvt. Ltd. — parent company of Bigbasket– agrees to a merger with smaller rival Grofers in which the Softbank already has a significant stake.
SoftBank has investments in Snapdeal, while Alibaba has in Snapdeal and Paytm. Also, Softbank Founder & CEO, Masayoshi Son and Alibaba’s founder share a long relationship. In January 2000, SoftBank led a round of $20 million of investment in Alibaba.
According to some sources, SoftBank is making space for Alibaba in the Snapdeal-Flipkart merger — indicating a three-way merger between Paytm Mall, Flipkart and Snapdeal.
SoftBank, which has been for the last three months trying to strike a deal to sell Snapdeal to Flipkart is in talks with Tiger Global to merge the Gurgaon-based marketplace with Flipkart. However according to sources the plausible deal could go either way — Snapdeal getting merged either with Flipkart or Paytm.
Experts says that a deal with Paytm makes more sense for Snapdeal as there are synergies between the two ecommerce companies and have Alibaba as a common investor. PayTM, which a valuation of close to $6 billion, has a user base of over 200 million.
SoftBank has already invested $2 billion, and will invest another $8 billion in Indian startups in the next eight years.