SUMMARY
The company issued 2.02 Mn shares for the funding
In March, Flipkart gave in-principle approval to PhonePe to operate as a separate entity
In April, PhonePe's founders increased their equity stake in the company
Bengaluru-based digital payments company PhonePe has received INR 697.9 Cr ($101.5 Mn) equity infusion from its Singapore-based parent, PhonePe Private Limited Singapore.
According to the ministry of corporate affairs filings accessed by Inc42, the company issued 2.02 Mn shares at a nominal value of INR 10 and a premium of INR 3440. News of the investment was first reported by paper.vc.
Interestingly, the investment has come after PhonePe founders— Rahul Chari Vardha and Sameer Nigam— increased their equity stake in the company. In April, Vardha picked up 1.67 Mn equity shares and Nigam picked up 6.63 Mn shares at a nominal value of INR 1.
Flipkart’s digital payments arm, PhonePe, has been the buzz of the town since Walmart acquired Flipkart in a deal worth $16 Bn in May 2018. PhonePe is one of the essential parts of Walmart’s reason to invest in the Flipkart group last year. Interestingly, Walmart’s entry had seen a major reshuffle in the management teams of Flipkart, its fashion subsidiaries Myntra and Jabong, but no such big movement has come to the PhonePe team.
Flipkart had bought PhonePe from its founders aka ex-flipsters Sameer Nigam, Rahul Chari and Burzin Engineer in 2015. The company claims to have crossed a billion transactions in December 2018. It offers peer-to-peer transfer, recharges, bill payments, gold purchases, among others.
The total investment by Flipkart in PhonePe is $184.1 Mn, out of its $500 Mn commitment to grow the company. The company is also exploring offline payment space and claims to have over 1 Mn offline merchants on its platform.
Apart from providing a point-of-sale device for offline vendors, the company is diversifying its offline offerings based on the requirements of the merchant. PhonePe claims to have over 150 Mn users and provides them with its “super-app”, which integrates 25 large digital apps including Goibibo and OYO.
At the same time, it has also expanded its offerings to wealth management with a focus on millennials and will involve partnerships with existing players rather than doing a lot of the work in-house as a separate entity.
In March 2019, Flipkart gave in-principle approval to PhonePe 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.
In FY18, the company reported a total income of INR 49.03 Cr, against INR 17.2 Cr in FY17. The company spent INR 840.6 Cr in FY18, as against INR 146.3 Cr in FY17. As a result, the company reported a loss of INR 791 Cr during the period.
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.
In May, Google Pay recorded more than 240 Mn transactions taking the leading position in UPI transactions volume for last month. Further, PhonePe took the second position after recording 230 Mn UPI payments, while Paytm clocked in 200 Mn transactions.
In terms of the value of transactions, the money transferred via Google Pay was the highest at INR 55K Cr, followed by PhonePe at nearly INR 44K Cr and around INR 38.2K Cr using Paytm.
