PhonePe IPO: The fintech player has filed its Updated Draft Red Herring Prospectus (UDRHP-I), formally initiating its stock market listing process. The filing confirms that the proposed issue is structured entirely as an Offer for Sale, with no fresh issue of shares. As disclosed in the UDRHP-I, the company will not receive any proceeds from the IPO. All funds raised will be paid to existing shareholders, with the stated objectives limited to the benefits of listing and the creation of a public market for existing equity.
The offer comprises 5,06,60,446 equity shares to be sold by WM Digital Commerce Holdings (Walmart), Microsoft Global Finance and Tiger Global PIP 9-1.
Offer structure and selling shareholders
The breakdown of shares offered for sale is as follows:
- WM Digital Commerce Holdings (Walmart): up to 4,59,42,496 equity shares
- Microsoft Global Finance: up to 36,78,790 equity shares
- Tiger Global PIP 9-1: up to 10,39,160 equity shares
The UDRHP-I discloses a uniform Weighted Average Cost of Acquisition (WACA) of Rs 1,996.80 per share for all selling shareholders.
Any issue price above this level represents realised gains for these shareholders. The company itself does not retain any portion of the proceeds.
Recent secondary transaction as pricing reference
The most recent valuation indicator disclosed in the UDRHP-I relates to a secondary transaction executed in September 2025. During this transaction, founders Sameer Nigam and Rahul Chari transferred a combined 1,68,43,450 equity shares to General Atlantic Singapore PPIL at a price of Rs 2,337.60 per share.
At this price level, Walmart’s portion of the Offer for Sale would translate into proceeds of approximately Rs 10,739 crore. Walmart currently holds 71.77% of PhonePe, equivalent to roughly 37.15 crore shares, which would imply a total holding value of over Rs 86,800 crore at the same reference price. These values are derived directly from shareholding and pricing disclosures in the prospectus.
As per the UDRHP, PhonePe has maintained the number one position in UPI transaction value for 58 consecutive months as of September 2025. The company reported a market share of 49.15% by transaction value during the period under review.
In the first half of FY26, the platform processed transactions worth Rs 73.70 lakh crore. User engagement metrics disclosed in the filing show 23.77 crore monthly active customers, with daily active customers accounting for 44.82% of this base. The company also reported a 30-day rolling retention rate of 99.23%, indicating limited churn among active users.
Revenue mix and growth trend
The UDRHP-I shows that revenue from operations grew 40.50% in FY25, compared with a growth rate of 73.77% in FY24. The prospectus attributes this moderation to the increasing maturity of the UPI payments segment.
Growth during FY25 and H1 FY26 was driven increasingly by non-payments revenue. Income from lending and insurance distribution increased by 108.79% in H1 FY26, as disclosed in the filing, reflecting the company’s efforts to monetise its user base beyond transaction processing.
Profitability metrics and ESOP impact
For FY25, PhonePe reported an adjusted EBITDA of Rs 1,477.19 crore, while recording a restated net loss of Rs 1,727.41 crore. The prospectus explains that this divergence is largely due to share-based payment expenses.
Share-based compensation costs amounted to Rs 2,357.86 crore in FY25. While these expenses are classified as non-cash, the UDRHP-I notes that they are recurring in nature and linked to employee retention and incentive structures.
New platforms
PhonePe has grouped Share.Market and Indus Appstore under its “New Platforms” segment. According to the prospectus, Share.Market has opened 12.6 lakh demat accounts since its launch in August 2023, leveraging PhonePe’s registered user base of 65.75 crore users.
Despite this scale, the New Platforms segment remains loss-making. The UDRHP-I reports an adjusted EBITDA loss of Rs 454.65 crore for this segment in FY25, with losses currently funded by cash flows from the payments business.
UPI volume cap
The UDRHP-I indicated regulatory risk related to the National Payments Corporation of India’s proposed 30% cap on UPI transaction volumes for third-party apps. PhonePe’s market share of 49.15% currently exceeds this threshold.
While the implementation of the cap has been deferred until December 31, 2026, the prospectus does not provide assurance of further extensions. It notes that enforcement could require operational changes, including constraints on transaction growth.
As disclosed in the Updated Draft Red Herring Prospectus, PhonePe held cash, cash equivalents and investments totaling Rs 12,159.77 crore as of the latest reported period. The company cites this balance as the reason for not including a fresh issue of shares in the IPO.
Conclusion
Based on disclosures in the Updated Draft Red Herring Prospectus, the PhonePe IPO is structured primarily as a liquidity event for existing shareholders. Walmart, Microsoft and Tiger Global are reducing exposure at a valuation above their acquisition cost, while regulatory uncertainty around UPI concentration remains unresolved.
Public shareholders are being offered ownership in a payments platform with extensive reach and high user engagement, alongside exposure to loss-making expansion initiatives and regulatory risk. All figures and statements above are sourced directly from the PhonePe UDRHP-I.