Razorpay, one of the largest payment gateways in India, is reportedly looking to raise anywhere between $200-$250 million in its next funding round which will push its valuation upwards of $4 billion when that happens.
It is believed that it is speaking with several hedge funds across the world including Tiger Global, DST Global, and others for the fundraising, and once those discussions are complete, the picture would be more clear. The company had recently raised $160 million at a valuation of around $3 billion as it continues to grow and expand on its business banking unit. This development comes at a time when the Indian payments space is undergoing a lot of changes with mergers and acquisitions happening at a fast pace.
Just a few days back, it was reported that Prosus, owner of one of the largest payments platforms PayU, had acquired another payment giant Billdesk and this consolidation of the 2 large payments platforms does pose a threat for the others in the industry as a combination of these 2 companies is expected to dominate the payments space in India in the years to come. Competitors like Razorpay would need to step up their game to counter this threat and for that, it is likely that they need funds and so it makes sense for them to go all out to bring in funds to help them stay in the race and also make some acquisitions in this space to counter the threat.
In July, the company had acquired TERA Finlabs which is into consumer lending models and credit products which shows that Razorpay is interested in expanding its credit operations shortly. It had already launched its cash advance and credit solutions products during the pandemic to help small businesses to tide through the difficult times and it is clear that it is looking to expand on its feature and product set. The competition in the payments space is large and very tight as it has some well-funded players like Paytm, Paypal, Payoneer, and Stripe and all of them are competing for the same business along with the PayU-Billdesk combination as well. There is going to be heated competition in the coming months and the fact that users have also stepped up their use of digital payments should further boost the revenues of these companies and we will have to wait and see who would be able to sustain amongst this heated competition.