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PhonePe, a payments company backed by Walmart Inc, is aiming to raise funds through an Initial Public Offering (IPO) for broading its financial services portfolio and deepening its core United Payments Interface (UPI)-based payments operations.

The digital payments company plans to go public once its core businesses turn profitable, which the firm hopes to achieve by next year.

The company is seeking a valuation of $8-10 billion, investment banking sources told news agency PTI on Wednesday.

According to the report, the payments firm will soon engage with bankers and legal consultants to take forward the IPO process.

The firm has initiated plans to move its registered holding entity from Singapore to India, underlining its 'made in India' credentials. PhonePe's board has already ratified the proposal to move the holding company to India.

PhonePe will list on Indian stock exchanges as opposed to many startups that prefer to incorporate overseas, primarily Singapore or the US, chasing relatively friendlier tax laws and business regulations there.

PhonePe, founded in 2015 and led by Sameer Nigam, was partially spun off from Flipkart in 2020. The e-commerce giant owns about an 87% stake in PhonePe, while Walmart directly owns about 10%.

PhonePe CEO on IPO launch

Last year, PhonePe CEO Sameer Nigam told reporters that the firm is in no hurry to launch its IPO and will go public "when it makes sense" for the company.

The company has just "scratched the surface" when it comes to financial services and is excited about the prospects in multiple verticals like insurance, the PhonePe CEO had said.

"We have never been in a hurry to get to an IPO. I think this company is in a sector, we are already regulated heavily, and we are getting deeper into financial services. So I think it's a foregone conclusion that the right answer for PhonePe some day is to become a public listed company...I'm not committing to an IPO date," he earlier stated.

PhonePe to raise its workforce strength to 5,200 by Dec-end

PhonePe is considering to increase its workforce strength to 5,200 by the end of December to ride on the growing UPI-based transactions in the country.

The firm has 2,600 employees and 2,800 open job positions across cities such as Bengaluru, Pune, Mumbai and Delhi.

PhonePe had last raised $700 million in 2020 led by its promoters Flipkart and Walmart at a valuation of $5.5 billion. The digital payments firm has raised a total of $1.7 billion in funding over 13 rounds that includes Tiger Global Management and Tencent as investors.

The firm has applied for a mutual fund license and a Non-Banking Financial Company (NBFC) licence and has acquired three companies – WealthDesk, OpenQ and GigIndia.  

PhonePe is the leader in the UPI space, enjoying a 47% market share in monthly transactions.

PhonePe currently holds a mutual fund distribution licence, and will be adding stocks and exchange traded funds to its growing list of wealth management products.

It announced that it will launch UPI SIP (Systematic Investment Plan) for investment in gold. Users will be able to invest in high purity 24K gold of a specified amount every month. The gold can be accumulated in their insured bank-grade lockers, maintained by MMTC-PAMP and SafeGold.

PhonePe was also in the process of integrating its processes with the Open Network for Digital Commerce (ONDC) pilot, India's indigenously created open source e-commerce network, with real-time transactions in the retail and food delivery space starting in some cities.

Under ONDC, real-time transactions in the retail and food delivery space have started in some cities such as Shillong and Delhi. Currently, ONDC is focusing more on retailers and restaurants.

Several companies including Zomato, CarTrade, Nykaa, Paytm, PolicyBazaar, and other internet-led businesses have launched their IPOs recently.

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