Report: PhonePe prepares for its IPO ; seeks a valuation of $8 to $10 bn

16 Jun 2022 , 09:09 AM

According to investment banking sources, PhonePe, a subsidiary of Walmart Inc’s Flipkart group, is exploring an initial public offering to extend its financial services portfolio and strengthen its core United Payments Interface (UPI)-based payments operations.

They stated that the digital payment startup is looking for a valuation of USD 8-10 billion. The business will shortly engage with bankers and legal advisers to move the IPO (Initial Public Offering) process ahead, according to sources.

In addition, the firm has begun planning to relocate its registered holding organization from Singapore to India, demonstrating its made-in-India credentials. The plan to relocate PhonePe’s holding company to India has already been approved by the board of directors.

The firm will list on Indian stock exchanges, as opposed to many businesses that opt to register overseas, especially in Singapore or the United States, in order to take advantage of more favorable tax and regulatory policies.

Ex-Flipkart executives Sameer Nigam, Rahul Chari, and Burzin Engineer launched PhonePe, which was bought by Flipkart in 2016. Flipkart was bought by Walmart in 2018, and PhonePe was included in the deal.

According to investment banking sources, the company wants to go public after its primary operations become profitable, which it hopes to do by 2023.

In addition, PhonePe intends to increase its personnel to 5,200 by the end of December in order to capitalize on India’s booming UPI-based transactions. The firm employs 2,600 people and has 2,800 job openings in places including Bengaluru, Pune, Mumbai, and Delhi.

PhonePe last received USD 700 million at a valuation of USD 5.5 billion in 2020, headed by its promoters Flipkart and Walmart. Tiger Global Management and Tencent are among the investors in the digital payment startup, which has raised a total of USD 1.7 billion in fundraising across 13 rounds.

The firm has applied for mutual fund and non-banking financial company (NBFC) licenses, as well as acquired three firms: WealthDesk, OpenQ, and GigIndia. PhonePe is the industry leader in the UPI arena, with a market share of 47% in monthly transactions.

PhonePe now maintains a mutual fund distribution license and plans to expand its wealth management offerings to include equities and exchange-traded funds.

It has announced the launch of UPI SIP (Systematic Investment Plan) for gold investments. Users will be able to invest a certain amount of money each month in high purity 24K gold. The gold can be stored in the MMTC-PAMP and SafeGold-managed insured bank-grade lockers.

PhonePe was also integrating its operations with the Open Network for Digital Commerce (ONDC) trial, India’s open-source e-commerce network, with real-time transactions in the retail and food delivery area beginning in select locations.

Real-time transactions in the retail and food delivery arena have begun in various cities under the ONDC, including Shillong and Delhi. The ONDC is now concentrating its efforts on stores and eateries.