Paytm, the Indian payments company backed by SoftBank, is reportedly in late-stage discussions to buy Coverfox, the Indian insurance marketplace.
According to a report in the Economic Times, Paytm is in talks to pay $100 million to $120 million in what will be an all-cash deal. The report cited two people aware of the matter for the information. It would mark the biggest acquisition for the Indian digital payments company that has emerged as a leader ever since India's government took high-denominated currency out of the system and shifted to digital payments. With the resulting cash crunch, Paytm became a household name. The company counts Alibaba, the Chinese eCommerce giant, as a backer as well.
The fact that SoftBank's Vision Fund is an investor in PolicyBazaar, another insurance marketplace, could raise issues with an acquisition deal closing, sources reportedly said. One source told the paper the Paytm board is finalizing the details of the deal. There's a chance it could still fall apart.
To date, the news outlet said, Coverfox raised $40 million in venture funding from investors including SAIF Partners, Accel Partners, Catamaran Ventures and International Finance Corp. If a deal is reached, the paper noted, these investors are expected to receive an exit.
News of a potential deal to acquire Coverfox comes as the company is looking to expand in India. Earlier this month it announced it partnered with Citigroup to launch a credit card in the country. The Paytm First Card will give Indian consumers 1 percent cash back on all transactions. For Paytm, the new card is aimed at helping it stand out from the crowd of digital payment rivals that seems to be growing every day. In an interview with Reuters, Vijay Shekhar Sharma, founder and CEO of Paytm parent One97 Communications, said the company is completing its offering by launching the credit card with Citibank. “We understood that there is a set of the customer base or customer needs that get fulfilled when you have a credit card or card in the hand,” the executive said.