PhonePe has raised another $200 million as part of a follow-on round as the Indian fintech giant bulks up its war chest from its recent split from parent company Flipkart. .
Walmart, which owns the majority of PhonePe, has invested $200 million in the startup. The ongoing round values Bengaluru-headquartered PhonePe at $12 billion at a pre-money valuation. PhonePe has previously said it plans to raise up to $1 billion in an ongoing financing round.
We are excited about the future of PhonePe and are confident how it will expand its offerings and bring financial services to Indian citizens at scale. India is one of the world’s most digital, dynamic and fast-growing economies, and we are excited to have the opportunity to continue supporting PhonePe,” Walmart International President and CEO Judith McKenna said in a statement.
With a valuation of $12 billion, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm. Paytm, which expects to reach $1 billion in revenue by March this year, is currently below $5 billion.
PhonePe is developed by a consortium of retail banks in India to handle transactions on UPI. UPI is the most popular way Indians transact online – processing over 8 billion transactions per month.
Seven-year-old PhonePe commands about 50% of these transactions, and it’s not slowing down. PhonePe said last week that it is on pace to process $1 trillion worth of transactions annually. Walmart, the majority e-commerce owner of Flipkart, said last month that the separation of Flipkart and PhonePe is very similar to that of eBay and PayPal, where each operates independently and can pursue its own initiatives.
Concerned about PhonePe’s growth, the Indian regulator has been enforcing a market cap check on each participating player, but its latest extension till 2025 has paved the way for another two years of rapid growth. (Google GPay and PhonePe currently handle over 80% of UPI transactions.)
PhonePe is also slowly becoming a distribution engine for selling products like insurance to its 450 million registered users. The startup said it plans to use the funds to build and expand its wealth management, lending, stock-raising, ONDC-based trading and account aggregator businesses.
Industry experts speculate that PhonePe’s endgame may be to become a bank, which they say justifies the lofty valuation. PhonePe recorded revenue of $234.3 million in the first nine months of 2022.
The company will generate revenue of $325 million for calendar 2022 and $504 million for 2023, according to a valuation report prepared by auditing firm KPMG and presented by Fonpe in January.
The startup does not expect to be EBIDTA positive until calendar year 2025, KMPG wrote in its assessment report. PhonePe’s financial and valuation report metrics have not been previously reported.
We would like to thank Walmart, our majority investor, for supporting our long-term ambitions. We are excited about our next phase of growth as we build new offerings for Indian consumers and merchants,” said Sameer Nigam, Founder and CEO of FonPay.
