Despite the startup ecosystem’s funding challenges, Walmart-owned digital payments brand PhonePe is seeking nearly $1 billion from General Atlantic and existing investors such as Tiger Global Management, Qatar Investment Authority, and Microsoft Corp.
According to the sources, the all-equity round is expected to close in the next two weeks, and it may raise the valuation of the company to close to $13 billion. Furthermore, Boston Consulting Group anticipates that its size will triple to $10 trillion by 2026.
According to the sources, the company is in talks with SoftBank Group Corp.’s Vision Fund, an investor in PhonePe’s parent company Flipkart, though Walmart will remain the largest shareholder. SoftBank has reduced its investments significantly this year as a result of portfolio losses.
The new valuation would place Bangalore-based PhonePe higher than its competitor Paytm’s parent company, One97 Communications, whose market capitalisation has dropped to $4 billion—a drop of roughly 70 percent from its market debut last year.
PhonePe, Paytm, Alphabet, Google Pay, Amazon Pay, and a few other startups are vying to capitalise on India’s rapidly digitising economy. Paytm is also backed by SoftBank.
PhonePe is getting closer to profitability in its core business. In the fiscal year ended March, revenue increased by 140 per cent to 16.5 billion rupees ($200 million), while losses decreased by 15 per cent.
Sources said that the platform is planning to roll out an IPO (initial public offering) in the next 18 to 24 months. The company has shifted its headquarters to India. Since Walmart is the parent organisation of Flipkart, PhonePe will be directly under the Walmart umbrella instead of Flipkart.
PhonePe, founded in 2015 by former Flipkart executives Sameer Nigam, Rahul Chari, and Burzin Engineer, was quickly acquired by Flipkart. PhonePe was acquired by Walmart in 2018 when the US retail giant paid $16 billion for Flipkart. As of last month, the startup had 415 million registered users and 30 million registered merchants across India.
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