SUMMARY
Will take a call on market listing only after achieving certain parameters: PhonePe CEO Sameer Nigam
PhonePe stands to lose millions of dollars in taxes because the domicile to India was treated as a restructuring event: Nigam
The comments came a week after PhonePe turned a decacorn after raising a mammoth $350 Mn funding at a valuation of $12 Bn
Flagging challenges for startups shifting back to India, PhonePe CEO Sameer Nigam on Wednesday (January 25) said that as many as 20 unicorns are willing to move to India if regulations are eased.
“At least 20 existing unicorns want to come back to India and domicile here, they have reached out to us, if regulations get much easier,” Nigam said during a YouTube Live organised by the digital payments giant.
Mincing no words, he said that there are too many challenges for startups shifting domicile to India.
Nigam’s comments come at a time when many Indian startups have shifted their headquarters to Singapore to avail tax benefits and incentives.
Citing tax-related challenges, Nigam said that PhonePe’s recent move to shift headquarters to India cost its investors almost $900 Mn in taxes. Noting that it is common among pre-profit startups to offset previous losses against profits, he said that the digital payments major is going to lose millions of dollars because the domicile to India was treated as a restructuring event.
“I hope things will get easier. If you want to move from any other market to India as a domicile it is treated as a capital gains event for existing investors so they have to make a fresh mark to market valuation, you have to pay tax on the delta,” said the top executive.
He also highlighted issues with employee stock option plans (ESOPs) for startups moving to India. Nigam said that the digital payments major had to convince several employees that their ESOP vesting period would start from zero, adding that this is ‘very hard’ for startups in early stages of growth and would disincentivise those looking to come back to India.
While the fintech giant is believed to have moved base to India to list on the bourses, Nigam said that a call on market listing will only be taken after achieving certain parameters. However, he did not elaborate on what these ‘parameters’ are.
However, Nigam added that profitability at scale and diversification will be the main focus of the company, adding that it would take the startup ‘a few years’ to reach that goal. He also noted that the Open Network for Digital Commerce (ONDC) and the account aggregator framework have opened up new opportunities.
The comments come amid multiple developments at the payments giant. Last week, PhonePe turned a decacorn after raising a mammoth $350 Mn funding from General Atlantic and other investors at a valuation of $12 Bn.
The fundraise came close on the heels of PhonePe moving its headquarters to India and hiving itself off as a separate entity from ecommerce startup Flipkart. Recently, Flipkart completed the full ownership separation process with PhonePe under which existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, purchased shares directly in PhonePe India.
Immediately afterwards, reports emerged that the move would make the investors of PhonePe liable to pay $1 Bn in taxes.
Meanwhile, the startup continues to be saddled with losses. PhonePe posted a net loss of INR 2,013.7 Cr in the financial year 2021-22 (FY22) on a total revenue of INR 1,692.7 Cr during the period.
