PhonePe Channelled Majority Of Past Year’s Investment Into Insurance Vertical

Walmart-owned fintech major PhonePe, which continues to be the biggest player in the UPI payments space after Google Pay, has infused over INR 800 Cr into its subsidiaries over the last year to fuel its expansion across diverse sectors, including insurance broking, wealth management and hyperlocal ecommerce.

As per ET’s report, citing regulatory filings, over half of this investment, totalling INR 426 Cr, was allocated to PhonePe Insurance Broking Service.

The company has injected over INR 1,000 Cr as equity investment into its insurance unit since obtaining its license.

Given the substantial investment, it’s evident that PhonePe is bullish on the insurance sector. However, despite this, the products it offers may not yield high remuneration, a senior executive told ET.

Additionally, the digital payments firm invested INR 287 Cr in its subsidiary, PhonePe Wealth Broking, which operates the stock-broking app Share.Market.

PhonePe ventured into stock broking with the launch of Share.Market last year, under its subsidiary PhonePe Wealth Broking. It has a separate app from PhonePe, which is built around payments, insurance, ecommerce, and B2B lending.

To begin with Share.Market allows retail investors to trade and invest in stocks, mutual funds, exchange-traded funds (ETFs) and WealthBaskets.

It injected INR 90 Cr in two tranches into Pincode Shopping Solutions, initially in July 2023 and again earlier this month. This unit oversees the ecommerce app Pincode, supported by Open Network for Digital Commerce (ONDC).

While PhonePe has strategically focused on insurance, its closest rival, Paytm, has been prioritising growth through consumer credit. Despite an increase in sales volume from micro-insurance products and two-wheeler covers, these offerings generate minimal revenue due to small commission margins. To bolster revenues, PhonePe Insurance needs to expand its portfolio with a greater emphasis on selling life and health insurance products, as per industry experts.

Founded in December 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer, PhonePe offers financial services to users. It offers digital payment services, mutual funds and insurance products.

Phonepe’s net loss crossed the INR 2,500 Cr mark in the financial year ended March 31, 2023. Its consolidated net loss rose 39% to INR 2,795.3 Cr in the financial year 2022-23 (FY23) from INR 2,013.7 Cr in the previous fiscal year due to a sharp increase in its ESOP expenses.

The fintech giant’s operating revenue surged an impressive 77% to INR 2,913.7 Cr during the year under review from INR 1,646.2 Cr in FY22.

Following a fundraising of nearly $1 Bn in 2023, PhonePe has been on an expansion journey, introducing various new offerings. These include dedicated apps for ecommerce (Pincode) and investment technology (Share.Market), along with its proprietary app store, Indus Appstore.

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