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PhonePe In Talks To Raise $1 Bn From Tencent, Tiger Global: Report

PhonePe In Talks To Raise $1 Bn From Tencent, Tiger Global: Report

PhonePe is planning to boost its valuation to $7 Bn - $8 Bn

It could take over two-three months for the investments talks to close formally

PhonePe may not entertain any deal below its expected valuation

Online payment platform PhonePe is reportedly in talks to raise about $1 Bn from marquee investors like China’s Tencent and Tiger Global. The Bengaluru-based payments company is planning to boost its valuation to $7 Bn – $8 Bn and may not look for any deal below this level.

Citing unnamed sources, an ET report said that the conclusion of the talks will be depending on the valuation at which these investors are willing to invest in the company.

The sources also added that it could take over two-three months for the investments talks to close formally. However, if the deal is successful, this will be the largest fundraise for PhonePe.

This development comes in after it was reported that Flipkart which acquired PhonePe in 2016, had given in-principal approval to its online payment subsidiary to operate as a separate entity. It can now set up an independent board and raise fresh funding from external investors. It was also speculated that the digital payments company plans to raise up to $1 Bn in external capital.

PhonePe was founded in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer. It is a mobile payments app which allows users to transfer money instantly from their smartphones using mobile phone number or a virtual payment address.

PhonePe has been scouting for investments for a long time. In March,  PhonePe had raised INR 743.5 Cr ($107.6 Mn) from its Singapore-based parent entity PhonePe Pvt Ltd to bulk up its cash position as it is an official co-sponsor for the TV broadcast of VIVO IPL 2019.

In February, it was also reported that PhonePe is looking to raise fresh funds from private equity (PE) firms KKR & Co, General Atlantic LLC, Tiger Global and Tencent.

PhonePe had also received a tranche of $65.8 Mn (INR 451 Cr) from Flipkart in August 2018. Earlier, Flipkart had also infused $79.6 Mn (INR 549 Cr) in March 2018 and $38.7 Mn (INR 267 Cr) in August 2017.

With PhonePe becoming a separate entity, the competition in the digital payment space has become more intense. Currently, the space is being dominated by Paytm, PhonePe and Google Pay.

In order to stay ahead in the game, PhonePe had signed a partnership with point of sale solution provider Payswiff with an aim to expand its offline merchant base. As part of the association, PhonePe will be made available as a payment option on Payswiff’s POS/mPOS terminals across their merchant base.

PhonePe is currently accepted at over 3 Mn offline retail outlets and kirana stores as well as at over 100 top online merchants in India.

In April, it also launched a mobile keyboard for AndroidOS that will allow users to transact money no matter which app they are using.

This feature allows users to efficiently send and receive money while messaging on social media, ecommerce apps, surfing the internet, or composing an email.

PhonePe’s efforts to scale up comes at a time when the recent data from National Payments Corporation of India (NPCI) showed that government-owned Unified Payments Interface (UPI) has recorded 781.79 Mn transactions with a total worth $20.42 Bn (INR 1,42,034.39 Cr).

According to NITI Aayog’s ”Digital Payments (2018 edition)”, India’s digital payments industry is estimated to grow to $1 Tn by 2023. It also suggested that the value of digital payments will likely jump from the current 10% to over 25% by 2023.