Walmart-owned digital payments platform PhonePe said it raised an additional $100 million in primary capital from Tiger Global, Ribbit Capital and TVS Capital Funds on Tuesday at a pre-money valuation of $12 billion.
This follows the firm’s $350 million primary fundraising from General Atlantic in January at a similar valuation. The latest investment is the second tranche of the company’s ongoing $1 billion funding round that could see more global investors take part.
PhonePe said it would use the capital to expand its payments and insurance businesses, as well as launch and scale new businesses like lending, stockbroking, ONDC (Open Network for Digital Commerce)-based shopping and account aggregators over the next few years.
“Our investment in PhonePe reinforces our conviction in backing best-in-class founders while betting on the financial digitization of the next 450 million Indians,” said Gopal Srinivasan, chairman and managing director at TVS Capital Funds. He added that PhonePe’s strong growth in financial services across payments, insurance, lending, and opportunities through ONDC and Appstore were key factors for TVS’ investment.
The latest tranche follows PhonePe’s change of domicile to India and a spin-off from parent Flipkart in December ahead of a planned public listing later this year. PhonePe was acquired by Flipkart in 2016.
As part of the transaction, existing shareholders of Flipkart Singapore and PhonePe Singapore, led by Walmart, bought shares directly in PhonePe India. This is aimed at allowing both companies to chart their own growth paths, build their businesses independently, and help unlock and maximize enterprise value for their shareholders.
The shift from Singapore to India has, meanwhile, come at a steep price for PhonePe investors, who had to shell out a whopping ₹8,000 crore in taxes to move the base from Singapore to India. PhonePe, backed by investors including Walmart and Tencent, also stands to lose $900 million of accumulated losses as it can’t save taxes by offsetting its losses as tax authorities view the shift in domicile as a restructuring event.
In terms of monthly UPI transaction volume, PhonePe had a 47% market share in December, according to data from the National Payments Corp. of India (NPCI). Rivals Google Pay and Paytm had a market share of 34% and 15%, respectively.
Founded in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer, PhonePe forayed into financial services in 2017 and has since introduced several mutual funds and insurance products on the platform. It claims to have more than 400 million registered users and 35 million offline merchants spread across India, covering 99% of pin codes in the country.
Last week, PhonePe launched support for cross-border payments through a unified payments interface (UPI), allowing Indian travellers to instantly pay foreign merchants using its network.
Last financial year, PhonePe’s consolidated operating revenue more than doubled to ₹1,646 crore from ₹690 crore in FY21. However, its losses jumped to ₹2,014 crore from ₹1,728 crore in the previous fiscal.
