India's PhonePe raises $350m at $12b valuation
General Atlantic has invested USD 350m – at a pre-money valuation of USD 12bn – in PhonePe, a digital payments platform that spun out from Indian e-commerce marketplace Flipkart.
Other unnamed international and domestic investors also took part in the round, which represents the first tranche of a planned fundraise of up to USD 1bn, according to a statement. It follows PhonePe announcing it would change its domicile to India and fully separate from Flipkart.
The company previously achieved a post-money valuation of USD 5.5bn in 2020 when Walmart – which had acquired a majority stake in Flipkart two years earlier – led a USD 700m round. Other investors were not disclosed, but they were all existing investors in Flipkart. The e-commerce giant counts Tencent Holdings, Tiger Global Management, and Microsoft among its backers.
Flipkart remained the majority shareholder in the company, but that round, and the introduction of external investors, marked a partial separation. The full separation “will allow both companies to chart their own growth paths, build their businesses independently, and help unlock and maximize enterprise value for shareholders of the two companies.”
PhonePe was established in 2015 by Sameer Nigam, formerly a senior vice president for engineering at Flipkart, and several colleagues from the e-commerce marketplace. Flipkart acquired the company a year later and made three investments totally around USD 133m between 2017 and 2020.
PhonePe is an app built on the united payment interface (UPI), an Indian government-owned gateway that facilitates interbank transactions for no cost. In 2017, it became the first UPI-based app to surpass 10m downloads. Key features include a “switch platform” that enables users to make purchases from other apps without leaving PhonePe.
The company is now India’s largest payments app, with 435m registered users, or one in four Indians. It claims to have digitised 35m offline merchants spread across 99% of the country’s pin codes and to have established itself as a leader in the Bharat Bill Pay System (BBPS), processing over 45% of all transactions facilitated by the platform.
PhonePe expanded into financial services in 2017 by offering users various investment options. It has since launched several mutual funds and insurance products. The new funding will be used to make investments in technology infrastructure to support offering financial services at scale. There are also plans to invest in insurance, wealth management, and lending businesses.
Shantanu Rastogi, a managing director and head of India at General Atlantic, highlighted PhonePe’s focus on “driving adoption of inclusive products developed on the open API based ‘India stack.’” He said the vision is aligned with General Atlantic’s commitment to back high-growth businesses that enable inclusion and empowerment.
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