UBS Group AG is in talks to invest $400 million in Paytm, the most valuable Indian startup, in a bet on the surging digital payments market in the world’s second-most populous country, people with knowledge of the matter said.
Paytm, which is valued at $16 Bn after its last funding round in 2019 led by TP Rowe, has Softbank, Alibaba’s Ant Group, and other institutional investors on its cap table, but the new round could see employees sell their stake, according to media. The company would not be raising fresh capital as part of the round and UBS’ investment fund is likely to back Paytm along with some of its partners and clients, the publication added.
Last month, Paytm dismissed speculation that Ant Group is considering selling its 30 per cent stake in the Indian digital payment giant amid border tensions and a toughening policy check in place. The Chinese financial giant has not launched a formal sale process yet, but the speculated UBS Group round could be part of this process. Paytm did not respond to the report on the UBS investment.
The main trigger for the stake to consider the divestment of its stake in Paytm is the worsening diplomatic relations between India and China in the past few months. In recent times, India has also toughened its FDI norms and tightened vigil over investments from its neighbors especially China. The Indian government has also banned 220 Chinese apps with the prospects of that number likely to go up soon.
Recently, announcing its financials, Paytm revealed that it had managed to increase its revenues to INR 3,629 Cr with a 40 per cent reduction in losses in the financial year 2020, ending March.