Fintech platform PhonePe is the latest decacorn in India’s startup ecosystem after its new $350-million funding growth equity firm General Atlantic. Marquee global and Indian investors are also expected to participate in the ongoing round, which will go up to $1 billion in multiple tranches, according to a company statement on Thursday.
In the ongoing round, PhonePe is seeking a pre-money valuation of $12 billion which is more than double the public market valuation of its close competitor Paytm. The fresh funding also makes PhonePe one of the most valued consumer Internet firms alongside others such as Byju’s, Swiggy, Oyo Rooms, Ola and others.
PhonePe’s raise also comes at a time when the global startup ecosystem has been going through a funding slowdown. Both global and domestic investors have turn conservative post the tech stock crash in India and US markets. Startups in India raised a total funding of $24 billion in CY22, which is a drop of 33% in comparison to CY21. However, this number was still more than twice the funds raised in CY20 and CY19 each, according a recent PwC India report.
The fundraiser follows PhonePe’s recently announced change of domicile to India and full separation from Flipkart. Last month, Flipkart and PhonePe announced a full ownership separation of PhonePe, which involves hiving of the digital payments firm into a separate entity. Both entities will, however, operate under the US-based Walmart.
After a partial separation from Flipkart in December 2020, a number of Flipkart shareholders, led by Walmart, acquired shares post the recent separation. This move, according to both entities, will allow them to “chart their own growth paths, build their businesses independently and help unlock maximise enterprise value for shareholders”.
PhonePe plans to deploy the new funds to make significant investments in infrastructure, including the development of data centres and help build financial services offerings at scale in the country. The company also plans to invest in new businesses, including insurance, wealth management and lending.
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“We look forward to delivering the next phase of our growth by investing in new business verticals like insurance, wealth management and lending, while also facilitating the next wave of growth for UPI payments in India,” Sameer Nigam, founder and CEO at PhonePe, said in a statement.
Founded in December 2015 by Nigam, Rahul Chari and Burzin Engineer, PhonePe has become a home-grown success story, with the company’s significant expansion powered by India’s growing UPI payment ecosystem. The PhonePe Group was acquired by the Flipkart Group in 2016 and is one of the top three digital payments platforms by the UPI volume. To date, the company has raised more than $1.7 billion in funding for large investors excluding the current round.
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By building products and offerings tailored to the Indian market, PhonePe today claims to have over 400 million registered users, meaning that more than one in four Indians are on PhonePe. The company also has over 35 million offline merchants spread across tier 2, 3, 4 cities and beyond. The fintech startup had forayed into financial services in 2017, providing users with safe and convenient investing options on its platform. Since then, the company has introduced several mutual funds and insurance products that offer every Indian an equal opportunity to unlock the flow of money and access to services.