New Delhi: Digital payments firm Paytm, owned by One97 Communications Ltd, is in talks to raise about $500 million from existing and new investors to build a new business vertical, said two people close to the development.
New Retail, which is likely to be launched by August-end, will be led by Renu Satti, who recently stepped down as the chief executive of Paytm Payments Bank.
New Retail will be Paytm’s attempt to create a business along the lines of China’s Koubei and Meituan.
While Koubei describes itself as a “life search engine providing living consumption information on restaurants, travelling, house renting and buying," Meituan, which also invests in food delivery start-ups, is a buying website for locally-found consumer products and retail services.
New Retail will also help customers discover neighbourhood pharmacies and grocery stores, besides facilitating online orders and instant deliveries.
Paytm confirmed that it was working on the new initiative, and is on the hunt for a new CEO for its payments bank operations. It added that the new model will help shopkeepers with technology, logistics and marketing capabilities.
Paytm is also building a peer-to-peer logistics platform with a pan-India rider network, which will be utilized for intra-city deliveries, the company said.
According to Paytm, it has already partnered with a large network of local shops, restaurants, pharmacies and grocery stores for accepting payments and will soon extend New Retail services to them.
The company has eight million offline merchants on its platform. “There is a gap and opportunity in the daily needs and the hyper-local space. These categories drive for us a million orders a day and we wanted to further expand," said Vijay Shekhar Sharma, founder and chief executive, Paytm.
One97 Communications has raised over $2 billion since its inception, and is currently valued at over $10 billion.
“We will work with local restaurants, grocery stores and pharmacies to enable them for local ordering and delivery. Renu will lead the New Retail initiative and she has resigned from the bank CEO position. Local ordering is expected to become one-third of Paytm orders and gross merchandise value by 2020," added Sharma.
One97 claims to have touched $4 billion in monthly gross transaction value, with the number of transactions touching a peak of 1.3 billion in the quarter ended June, Mint had reported earlier this month.