When the all-equity financing concludes in the coming weeks, it may push PhonePe's worth to about $13 billion.
According to people familiar with the matter, the digital payments brand PhonePe, which is owned by Walmart Inc., is attempting to raise as much as one billion dollars from General Atlantic and existing investors including Tiger Global Management, Qatar Investment Authority, and Microsoft Corporation. This comes at a time when funding for startups around the world is becoming increasingly scarce.
The all-equity round is expected to close within the next two weeks and may bring PhonePe's valuation close to $13 billion, including the new capital invested, according to the people, who asked not to be named as the details of the deal are private. The people said that the closing of the round is expected to take place within the next two weeks. In a digital payments market that Boston Consulting Group predicts will triple in size to $10 trillion by 2026, this valuation places PhonePe among India's most valuable brands.
According to the sources, the firm is in discussions with the Vision Fund of SoftBank Group Corp., which is an investment in PhonePe's parent corporation Flipkart; nonetheless, Walmart will continue to be the most prominent investor. This year, as a result of the significant losses in its investment portfolio, SoftBank has significantly reduced the amount of money it is investing.
The new value would put Bangalore-based PhonePe at a greater valuation than the parent company of arch-rival Paytm, One97 Communications Ltd., whose market capitalization has decreased to $4 billion, which is a decrease of around 70% from its market debut the previous year. PhonePe, Paytm, Alphabet Inc.'s Google Pay, and Amazon.com Inc.'s Amazon Pay, as well as a slew of startups aiming to benefit on India's rapidly digital economy, are in an increasingly competitive environment. Paytm also has the backing of SoftBank.
One of the persons added that PhonePe is getting closer and closer to becoming profitable in its primary business. According to the corporation, during the fiscal year that concluded in March, the digital payments player's revenue increased by around 140% to 16.5 billion rupees ($200 million), while the company's losses decreased by approximately 15%.
The lack of available finance continues to be a problem for the startup ecosystem in India, which has resulted in businesses laying off employees by the thousands and postponing their aspirations to go public as their valuations fall.
PhonePe has relocated its headquarters from tax haven Singapore to the more stringently regulated Indian market in order to be ready for an initial public offering, which sources say is still at least 18 to 24 months away. They said that the firm would operate as an independent organisation directly under the Walmart umbrella, rather than falling under the purview of Flipkart.
PhonePe was initially established in 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, all of whom had previously held senior positions at Flipkart. Flipkart quickly purchased PhonePe. The American retailing giant Walmart acquired ownership of PhonePe in 2018 as part of its $16 billion acquisition of the Indian e-commerce platform Flipkart. As of the previous month, the fledgling company had 415 million registered users throughout India in addition to 30 million registered merchants.
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