Mumbai: Fintech startup Razorpay is in talks with its existing investor Singapore's sovereign investment fund GIC and others to raise $150-200 million in a financing round that could see its valuation nearly double to $2 billion in less than six months, three people privy to the matter told The Economic Times. That would be one of the fastest increases in valuation for an Indian startup, signalling the rising investor interest in digital payments and the overall financial services sector, which is increasingly moving online.“There could be other new investors also looking to come in, but Razorpay’s existing investors such as Tiger Global and Sequoia Capital will likely participate along with GIC,” said a person privy to the deal details.The sharp increase in valuation is due in large part to the uptick in digital transactions in recent months as the Covid-19 crisis has pushed businesses—small and large—to adopt online payments as an option, industry experts said.“The investor sentiment is favourable for fintech firms as they can command strong valuations due to a massive push towards digital payments and financial services in India,” another person in know of the development said.The Bengaluru-based startup entered the sought-after unicorn club in October, when it raised $100 million at a valuation of just over $1 billion, in a round led by GIC and venture capital firm Sequoia Capital. The round also saw participation of existing investors Ribbit Capital, Tiger Global, Y-Combinator and Matrix Partners.Razorpay and GIC didn’t immediately respond to queries emailed by ET on the potential fundraise. 81200569Expansion of Payments PlatformThe payments service provider helps businesses automate collections through its gateway service, while also helping small businesses manage money flow. It partners with big online merchants, such as Swiggy, Zomato and Ola, while also providing payments services to over five million small merchants.People aware of the thinking in the company said that Razorpay could use the fresh capital to expand its payments platform, anticipating further growth in 2021 amid a marked shift towards cashless payments. “Another area where the firm would look to strengthen its technology would be in the areas of fraud analytics and security features on its platform,” the person said.Founded by Harshil Mathur and Shashank Kumar, Razorpay also runs a neo-banking platform RazorpayX, which helps merchants run current accounts and access credit from partner banks. As of January, RazorpayX was processing loans worth Rs 250 crore each month.Mathur had told ET that the firm has ambitions to scale its credit disbursement to Rs 500 crore each month by the second half of fiscal 2022. The company expects RazorpayX and Razorpay Capital, its lending vertical, to contribute 35% of its total revenue, Mathur had said.The fintech startup has raised $206.5 million in four investment rounds since its inception in 2014. Prior to the $100 million round in 2020, the firm had raised $75 million in series C funding in 2019 led by Ribbit Capital and Tiger Global.Razorpay recently attracted the scrutiny of the Enforcement Directorate owing to a proliferation of unauthorised Chinese loan apps using its gateway to accept payments from its borrowers.ET in January had reported that a significant number of unauthorised loan apps flagged by investigative authorities were using the services of Razorpay at the time along with other payment gateways. The company took down hundreds of such merchants from its platform, it said in a statement to ET.
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