Walmart-backed PhonePe said on Thursday it raised $350 million (roughly Rs. 2800 crore) from private equity firm General Atlantic at a $12 billion (roughly Rs. 97,700) valuation, making it India’s most valuable payments firm and giving it funds to expand into the lucrative lending space.
A second tranche of investments from marquee global and Indian investors is expected to close next month, a PhonePe spokesperson said, declining to give further details.
Despite a funding winter, the Indian digital payments space has been a bright spot due to the popularity of online payments and startups’ ambitions to branch into the lucrative financial services space.
PhonePe will use the funds for infrastructure and new businesses, including insurance, wealth management and lending, founder and chief executive Sameer Nigam said in a statement.
While the Indian government has pushed the country’s cash-loving merchants and consumers to adopt digital payments, it wants to control the clout of payments firms, seeking to cap any one firm’s market share at 30 percent by the end of 2024.
PhonePe had a 46 percent market share in December, according to National Payments Corporation of India data. Alphabet-owned Google‘s payments app had a 34 percent share and SoftBank-backed Paytm had 14.7 percent.
Paytm, whose current market value of $4.2 billion (roughly 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 merchant loans.
PhonePe, in which U.S. retail giant Walmart took a majority stake in 2018, shifted its registered headquarters from Singapore to India last year and also completed its separation from Indian e-commerce giant Flipkart.
The company’s shift 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