PhonePe has raised $700 million from existing investors, in a new financing round. This has now given the digital payments platform a valuation of $5.5 billion. And now PhonePe is using the opportunity to assert its independence from the online retail giant. The latest round means that Flipkart’s stake in PhonePe will reduce to 87 per cent but it will remain the platform’s majority shareholder.
Sameer Nigam, founder and chief executive of PhonePe, in a statement said the partial spin-off gives the company access to dedicated long-term capital to pursue its vision of providing financial inclusion to a billion Indians. “We are really excited to have access to dedicated long-term capital to further our ambitions in the financial services distribution sector as well as creating large innovative growth platforms for India’s micro, small and medium enterprises,” he said. Kalyan Krishnamurthy, CEO Flipkart Group, said this move will help PhonePe maximize its potential as it moves to the next phase of its development, and it will also maximize value creation for Flipkart and the shareholders.
The fintech firm has more than 100 million monthly active users which helped it record nearly one billion payment transactions in October, surpassing Google Pay to become the top UPI payments app. Analysts at Bernstein, in a recent report, highlighted PhonePe as one of the startups in India that could file for an IPO in within three years. The report pointed out that the digital payments platform’s reliance on parent Flipkart has shrunk from 50 per cent of monthly transactions to less than one per cent today.
India’s digital payments market is expected to more than double in size to $135 billion in 2023 from 2019 levels, has also attracted the likes of Amazon and Facebook Inc. which have come up with their own systems to attract users.