Paytm Money to become unicorn with $1.2 Bn mega round at $5 Bn valuation

The activity in fintech is in its peak season right now, with every fifth investment going into a startup operating in the segment. Now, Vijay Shekhar Sharma led Paytm's financial services subsidiary Paytm Money is also in the process of raising its own mega round.

Wednesday morning reports say that the company is in talks to raise a mega funding round for Paytm Money, the entity that runs the mutual funds, insurance, forex, and other financial services on the platform.

The figures we are talking about here is $1.2 billion worth of funds at $5 billion valuation. The logic is that financial services like those mentioned above and their digitization is the “Next Big Thing” in the industry, and hence several investors including Paytm’s existing backers have shown interest in the round.

Till now, Paytm Money had never raised a round of its own (hence fully owned subsidiary) and was surviving on a $10 million investment commitment from the parent. Now the firm sees SoftBank and Alipay - Alibaba’s financial arm’s investment interest and as per industry reports, the deal may close in the next three months.

On the other hand, Paytm is also in talks to make an acquisition in the fintech market to “run up” the mega round. A Business Standard source outlined that the company is planning on acquiring a major insurance marketplace and has already set aside $150 million for the transaction even when the talks haven’t achieved fruition yet.

For Paytm, that has already scaled up its wallets and Payments Banks business significantly to cover a large part of the market while the rest is being covered by its tough competitors PhonePe and Google Pay, the next growth opportunity lies in financial services. With this funding, the firm plans on taking this business and grow it in tier-II and tier-III.

With at least a billion dollars worth funding and $5 billion valuation, not only will Paytm Money be the third unicorn of Paytm family, but also one of the most valued startups in the country right below BYJU’s.

The parent Paytm in itself is the most valued startup right now with around $10-12 billion valuation. The other unicorn in the family is Paytm Mall valued at about $2 billion.