PhonePe gets $100 mn more from General Atlantic, others

General Atlantic raised its bets on Walmart Inc.-owned PhonePe as the US private equity firm led a fresh funding of $100 million ( ₹820 crore) in the Indian digital payments platform.

Other investors joined General Atlantic in the investment that was made at a pre-money valuation of $12 billion, PhonePe said in a statement on Wednesday. It didn’t disclose General Atlantic’s share in the total fundraise.

This is in addition to the $350 million raised by PhonePe from General Atlantic this January as part of its ongoing target to raise a total of $1 billion. It has raised $750 million so far.

PhonePe had previously raised $100 million from Tiger Global, Ribbit Capital and TVS Capital, as well as $200 million from its parent Walmart.

PhonePe is looking to deploy the funds to boost infrastructure, including the development of data centers, and to build financial services offerings at scale, the company said at the time of announcing its $1 billion fundraise.

It also plans to invest in new businesses, including insurance, wealth management, Open Network for Digital Commerce (ONDC)-based shopping, and lending as well as scale UPI payments in India, including UPI lite and credit on UPI.

The fundraisings track PhonePe’s change of domicile to India from Singapore, and its spin-off from Walmart-owned e-commerce major Flipkart. It shifted its domicile to India in October last year as it wanted to list on the Indian bourses and create shareholder and ecosystem value locally. While the company had earlier planned to go public in 2023, it has now put the listing plans on the back burner.

The domicile shift cost PhonePe’s investors a whopping ₹8,000 crore in taxes. The domicile separation saw existing shareholders of Flipkart Singapore and PhonePe Singapore getting shares directly in PhonePe India.

PhonePe was bought by Flipkart in 2016. The separation from Flipkart was aimed at allowing both companies to chart their own growth paths, and maximize enterprise value for shareholders.

PhonePe was founded in December 2015 by CEO Sameer Nigam, Rahul Chari and Burzin Engineer. It offers several payments and financial services, including mutual funds and insurance products. It pits against publicly-listed Paytm and Google Pay, among others in India’s digital payments space. It claims to have more than 400 million registered users and more than 35 million offline merchants covering 99% of pin codes across India.PhonePe was looking to add buy-now-pay-later (BNPL) capabilities as well as access to an NBFC (non-banking finance company) licence by acquiring fintech startup ZestMoney for $200-300 million. The deal was later cancelled due to due diligence issues.

In the financial year 2021-22, PhonePe’s consolidated operating revenue more than doubled to ₹ 1,646 crore from ₹690 crore in FY21. However, its losses widened to ₹ 2,014 crore from ₹ 1,728 crore during the period. The company is yet to report its financial statements for the last financial year.

PhonePe is the current market leader for UPI transactions in India. The platform stood as the top UPI app in March as it processed nearly 47% of all UPI transactions. In total, it processed nearly 4.07 billion transactions worth ₹ 7.07 trillion. PhonePe was followed by Google Pay and Paytm.