General Atlantic raises exposure to India's PhonePe
General Atlantic has invested USD 100m in India’s PhonePe only four months after providing the payments platform with a USD 350m round at a pre-money valuation of USD 12bn.
The private equity firm’s investment last January coincided with PhonePE announcing it would redomicile from Singapore to India and fully separate from its parent company, e-commerce marketplace Flipkart. That deal was followed closely by another USD 100m investment from Ribbit Capital, Tiger Global Management and TVS Capital at the same valuation.
These three investments are billed as tranches of an ongoing round, which has now collected USD 850m in primary capital and aims to raise USD 1bn in total. The capital will be used for services related to India’s unified payments interface (UPI) system, including credit options and a low-value transactions feature called UPI Lite.
Total funding since the company’s inception in late 2015 comes to more than USD 2bn, with previous investors also including the likes of Canada Pension Plan Investment Board (CPPIB) and Flipkart-owner Walmart. Flipkart was still the majority shareholder as of February.
PhonePe is India’s largest payments app with more than 460m registered users, or one-fourth of the total population. It claims to have digitalised some 35m offline merchants in lower-tier cities and processed more than 45% of transactions on the central bank’s Bharat Bill Pay System (BBPS) infrastructure.
The company is active in financial services with various mutual fund and insurance products, and there are plans to enter areas such as lending, stockbroking, account aggregators, and online shopping. General Atlantic has highlighted the potential for new products to drive financial inclusion.
The company was established by Sameer Nigam, formerly a senior vice president for engineering at Flipkart, and several colleagues from the e-commerce marketplace. Flipkart acquired it a year later and made three investments totalling around USD 133m between 2017 and 2020.
General Atlantic was active in India’s payments technology space in 2016, when it acquired a 20% stake gateway services provider Billdesk for USD 120m. Industry counterpart PayU had agreed to acquire BillDesk for USD 4.7bn in 2021, which would have facilitated several PE exits, but the deal collapsed last October due to some conditions not being met by an agreed deadline.
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