Paytm, the Indian digital payments and ecommerce group, has raised $1.4bn in capital from the Japanese telecoms group and technology investor Softbank.

The investment is Softbank’s single largest in India to date, and comes as it tries to reboot its India strategy after its biggest previous bet – on the ecommerce group Snapdeal – ran into trouble.

Softbank was one of the most conspicuous drivers of a wave of investment into India’s IT startups in 2014 and 2015, but has been dramatically rethinking its strategy in recent months. Alongside its talks on the Paytm investment, it has been trying to engineer a takeover of Snapdeal by Flipkart and has discussed investing more than $1bn into the merged entity that would result from that deal.

Paytm is best known in India for its payments business: it is the country’s most popular provider of virtual “wallets”, with over 200m subscriptions to its mobile money platform.

It plans to launch next week a payments bank, one of a new class of institutions announced by the central bank that can handle transactions and deposits but not issue loans.

It has previously attracted investment of more than $500m from Alibaba – of which Softbank is the largest shareholder – and its affiliate Ant Financial.

Paytm is openly seeking to emulate the Chinese group’s success in building a business that combines financial services with online retail – its founder Vijay Shekhar Sharma has said that his inspiration for the business came while watching a speech by Alibaba founder Jack Ma in 2011.

Paytm has spun out its ecommerce unit into a standalone business, in which Alibaba and Ant Financial agreed to invest $177m in March.

The company believes it has already overtaken Snapdeal to become India’s third-largest ecommerce platform by volume, behind local rival Flipkart and Amazon’s Indian business, according to a person close to Paytm. The person added that it expects to triple those volumes over the next year, helped by Alibaba’s strategic insights and by its connections with Chinese vendors.

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