PhonePe Joins Decacorn Club With $350 Mn Funding From General Atlantic

Walmart-owned fintech giant PhonePe has raised $350 Mn in a funding round led by General Atlantic, with participation from other investors.

PhonePe raised the round at a pre-money valuation of $12 Bn, joining India’s decacorn club. The investment marks the first tranche of an up to $1 Bn total fundraise that was commenced in January 2023.

With the fresh capital, PhonePe plans to make significant investments in infrastructure, including the development of data centers and help build financial services offerings at scale in the country. The payments platform also plans to invest in new businesses, including insurance, wealth management, and lending.

The fundraise is expected to support PhonePe as it seeks to turbo-charge the next wave of growth for UPI payments in India, including UPI lite and credit on UPI to enable greater financial inclusion for Indians, it said in a statement.

“We look forward to delivering the next phase of our growth by investing in new business verticals like Insurance, Wealth Management and Lending, while also facilitating the next wave of growth for UPI payments in India,” said Sameer Nigam, founder and CEO of PhonePe.

Founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, PhonePe claims to have more than 400 Mn registered users. It has also claimed to have digitised more than 35 Mn offline merchants spread across Tier-II, III, and IV cities and beyond, covering 99% of pin codes in the country.

Recently, ecommerce major Flipkart completed the full ownership separation process with PhonePe. As part of the transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, purchased shares directly in PhonePe India.

This completed the move to make PhonePe a fully India domiciled company. Last year, PhonePe revealed its plans to move its registered entity from Singapore to India, in line with the company’s plans to list on Indian stock exchanges.

PhonePe continues to dominate the Indian digital payments space as it processes the largest chunk of UPI transactions. According to the data released by the National Payments Corporation of India (NPCI), PhonePe accounted for nearly 50% of the total UPI transactions processed in December, 2022.

In total, it processed around 367.42 Cr transactions worth INR 6.49 Lakh Cr during the month. It competes with the likes of Paytm, Google Pay, and Amazon Pay in the fintech space.

The digital payment startup posted a total consolidated revenue of INR 1,692.7 Cr in FY22 as against INR 725.3 Cr in FY21. However, a 1.5X jump in total expenses to INR 3,705.6 Cr in FY22 from INR 2,456.8 Cr in FY21,resulted in widening of its net loss.

PhonePe’s net loss rose 16.4% to INR 2,013.7 Cr from INR 1,728.7 Cr in FY21, as per its consolidated financial statements uploaded on the website of the Ministry of Corporate Affairs.