Walmart-backed PhonePe said on Thursday it has raised $350 million (roughly Rs. 2.8 billion) from private equity firm General Atlantic at a valuation of $12 billion (roughly Rs. 97,700), making it at India’s most valuable payments firm and gives it funds to expand into the lucrative lending space.
A second tranche of investments from major global and Indian investors is expected to close next month, a PhonePe spokesman said, declining to give further details.
Despite a funding winter, India’s digital payments space has been a bright spot due to the popularity of online payments and the ambitions of startups to break into the lucrative financial services space.
PhonePe will use the funds for infrastructure and new businesses, including insurance, wealth management and lending, founder and CEO Sameer Nigam said in a statement.
While the Indian government has pressured the country’s cash-loving merchants and consumers to embrace digital payments, it wants to rein in the influence of payment companies, seeking to limit any company’s market share to 30 percent for purposes of 2024.
PhonePe had a 46 percent market share in December, according to data from the National Payments Corporation of India. Google’s payments app, owned by Alphabet, had a 34 percent stake and SoftBank-backed Paytm had 14.7 percent.
Paytm, whose current market value of $4.2 billion (approximately Rs 34,200) is now dwarfed by PhonePe, has recently reported strong growth in its financial services such as buy-now-pay-later, personal and business loans.
PhonePe, in which US retail giant Walmart acquired a majority stake in 2018, moved its registered headquarters from Singapore to India last year and also completed its spin-off from Indian e-commerce giant Flipkart.
The company’s move to India, according to some reports, has been to ensure an easier entry into the country’s highly regulated financial services industry.
© Thomson Reuters 2023