PhonePe raises $350 mn from General Atlantic; now bigger than Swiggy, Paytm

Joins decacorn club as most-valued fintech after topping $12-billion valuation in new funding

Payments and financial services unicorn PhonePe has raised $350 million in funding from General Atlantic — a leading global growth equity firm — at a pre-money valuation of $12 billion, making the Walmart-owned start-up the most-valued financial technology (fintech) player in India.

 

The investment is the first tranche of the company’s latest fundraise that could see marquee global and Indian investors put in up to $1 billion in the fintech firm.

 

With this funding round, the home-grown digital payments start-up has more than doubled its valuation — from $5.5 billion in 2020. With a $12-billion valuation, it has joined the decacorn club.

 

PhonePe has managed to raise late-stage funding amid a funding winter.

 

General Atlantic will be infusing substantial capital, along with Walmart and other new investors, to a final raise of $1 billion, informed sources.

 

The latest fundraise follows the company’s recently announced change of domicile to India and full separation from Flipkart.

 

It could not be immediately ascertained how the market capitalisation table of the company will look like, given other investments will come in some weeks. Additionally, Qatar Investment Authority and Microsoft have brought shares directly into the company as part of its complete separation from Flipkart.
 

 

 

PhonePe plans to deploy the funds to make investments in infrastructure, including development of data centres and build financial services offerings at scale in the country.

 

The company also plans to invest in new businesses, including insurance, wealth management, and lending.

 

“We are an Indian company built by Indians. Our latest fundraise will help us further accelerate the Government of India’s vision of digital financial inclusion for all,” said Sameer Nigam, founder and chief executive officer, PhonePe.

 

PhonePe, which was founded in December 2015, said the funding will help it “turbo-charge” digital payments in India and enable greater financial inclusion.

 

The company has more than 400 million registered users, implying more than one in four Indians use its services.

 

“We look forward to delivering the next phase of growth by investing in new business verticals like insurance, wealth management, and lending, while also facilitating the next wave of growth for Unified Payments Interface (UPI) payments in India,” he said.

 

PhonePe has managed to double its valuation, even as its losses have mounted.

 

For 2021-22, the company reported revenue of Rs 1,646 crore — up 138 per cent year-on-year. Loss for the financial year widened to Rs 2,014 crore — up from Rs 1,729 crore in 2020-21. Loss, excluding employee stock ownership plan cost, was Rs 671 crore.

 

PhonePe has the largest market share in the UPI payments space. With this fundraise, PhonePe ranks above other decacorns like Swiggy, Oyo, Ola, Paytm, Dream11, RazorPay, and Polygon.

 

This deal could be a catalyst for funding in the fintech space, largely impacted by the funding chill and dip in valuations. An instance of valuation mismatch was the PayU-BillDesk deal.

 

“…the PhonePe management team has pursued a clear mission to drive payments digitalisation and significantly broaden access to financial tools for the people of India. They remain focused on driving the adoption of inclusive products developed on the open application programming interface-based India stack. This vision is aligned with General Atlantic’s long-standing commitment to backing high-growth businesses focused on inclusion and empowerment,” said Shantanu Rastogi, managing director and head-India, General Atlantic.

 

PhonePe recently announced a full separation from Flipkart Group. After partial separation from Flipkart in December 2020, several Flipkart shareholders, led by Walmart, acquired shares in the recent separation. This move will allow both companies to chart their growth paths and build their businesses independently.