New Delhi: One97 Communications Ltd, which operates Paytm, has raised $1 billion from new and existing investors, including Japan’s SoftBank Group and China’s Ant Financial, a person familiar with the development said.

The funds will allow the digital payments firm to beef up its finances to make a deeper foray into India’s hinterland amid intensifying competition from Google Pay and Walmart Inc.-owned PhonePe Pvt. Ltd.

The fundraising has lifted Paytm’s valuation to $16 billion, from the $15 billion it was valued at in August when some of its employees cashed out their shares in a secondary sale to unnamed New York-based investors.

Paytm said on Sunday that it raised a fresh round of equity from existing shareholders such as Ant Financial, an affiliate of Alibaba Group Holding Ltd, and SoftBank Vision Fund. They were joined by new investors, including T. Rowe Price Associates, Inc. Discovery Capital, an existing shareholder of Paytm, also took part in the round. The company, however, did not disclose the quantum of funds raised.

The fresh investments will be used for growing the payments and financial services business, said Paytm founder Vijay Shekhar Sharma.

Paytm plans to invest 10,000 crore over the next three years to bring financial inclusion to more under-served users across India.

“In its first phase of growth, Paytm pioneered low cost digital payments acceptability in India using its QR-code technology in local shops and retailers. Paytm, which at present serves merchants in more than 2,000 towns and cities spanning across 650 districts, aims to bring low cost mobile enabled financial services to rural India. The company will invest and support millions of rural Indians towards self-sustainability through job creation," it said.

Paytm has been in talks since the start of this year to raise funds amid mounting losses, growing competition in the digital payments sector and no clear source of revenue growth path to monetize its customer base.

In India, digital payments have climbed more than five times since 2015 to 22.4 transactions per person in the year ended 31 March, Reserve Bank of India figures show.

The market is expected to expand to $1 trillion by 2023, according to a report by NITI Aayog last year.

Paytm is locked in a market share war in digital payments with Google Pay and PhonePe. Once the clear market leader, the digital payments company has fallen behind its two rivals in UPI transactions.

Paytm is trying to become a comprehensive financial services firm to improve margins but has struggled to expand its payments bank and other businesses. According to reports, Japan’s SoftBank has been pressing Paytm to accelerate its spending cut and find new revenue streams.

The Masayoshi Son-led group, which runs the $100-billion Softbank Vision Fund, has also come under criticism after the botched IPO plans of WeWork, which led to a $4.6 billion loss for SoftBank.

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