Synopsis: Walmart-backed fintech firm PhonePe is preparing for an initial public offering (IPO) in India at an estimated valuation of $9 billion to $10.5 billion. The offering could raise up to $1.05 billion, with major investors including Walmart, Microsoft, and Tiger Global expected to sell part of their stakes.
PhonePe Targets Up to $10.5 Billion Valuation in Upcoming IPO
Mumbai: Walmart-backed Indian fintech company PhonePe is preparing to launch its initial public offering (IPO) with an expected valuation ranging between $9 billion and $10.5 billion. According to people familiar with the development, the public issue could raise between $900 million and $1.05 billion.
Even at the upper end of the valuation range, the figure would still be lower than the $12 billion valuation at which the company raised $100 million from private investors in 2023.
Existing Investors Likely to Reduce Stakes
As part of the IPO, Walmart is expected to reduce its shareholding in PhonePe by around 12 percent. Other investors, including Tiger Global and Microsoft, are reportedly planning to exit their stakes through the offering.
Together, these investors are expected to sell approximately 50.7 million shares during the IPO. The company itself is not planning to issue new shares, meaning the offering will primarily consist of an offer-for-sale by existing shareholders.
PhonePe Plans Listing by April
PhonePe had earlier filed draft documents for its IPO in September and aims to complete the listing process by April. However, the final timeline may depend on prevailing capital market conditions and global developments.
Market conditions, including geopolitical tensions and investor sentiment, could influence the timing and valuation of the offering.
Second-Largest Fintech IPO in India
If successful, PhonePe’s listing would become the second-largest fintech IPO in India, following Paytm’s public issue in 2021 which was valued at around $20 billion.
Paytm currently has a market capitalisation of approximately $7.1 billion.
Dominant Position in UPI Payments
PhonePe currently has more than 650 million registered users and remains the largest platform for Unified Payments Interface (UPI) transactions in India.
Data from January shows that the company processed nearly 10 billion transactions out of a total 21.7 billion UPI transactions during the month, giving it a significant share of the digital payments ecosystem.
UPI, launched in 2016, has become the backbone of India’s digital payments system. However, the government does not allow companies to charge fees on most UPI transactions, which has limited revenue generation opportunities for fintech platforms.
Revenue Growth but Losses Continue
According to the company’s IPO filings, PhonePe’s revenue increased by around 22 percent to Rs. 39.18 billion during the six months ending September 30.
However, the company’s losses also widened to Rs. 14.44 billion during the same period, compared to Rs. 12.03 billion a year earlier.
Concerns Around Monetisation
Some market analysts believe that while PhonePe has built a massive user base, questions remain about how effectively the platform can monetise its services.
Two portfolio managers who attended pre-IPO roadshows indicated that enthusiasm around the fintech sector has cooled slightly, with investors closely evaluating the company’s long-term revenue potential.
The success of the IPO may therefore depend on how convincingly PhonePe demonstrates its ability to generate sustainable profits from its large digital payments network.
📌 Key Takeaway
PhonePe is preparing for a major IPO that could value the company at up to $10.5 billion. While it dominates India’s digital payments market, investors remain focused on its ability to convert its massive user base into sustainable revenue.