PhonePe raises $700 million at a $5.5 billion valuation, will operate as a separate entity
- PhonePe has raised $700 million in its latest funding round, led by Walmart and other existing investors.
- As a result of this deal, Flipkart will be selling a partial stake in PhonePe to Walmart and other investors.
- The company notes that Flipkart will remain the majority shareholder, and it will continue to collaborate closely with PhonePe.
- PhonePe also noted that it had 100 million active users in October 2020.
PhonePe was founded by three former Flipkart employees in December 2015.
“This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians,” said Sameer Nigam, founder and chief executive of PhonePe, in a statement.
Kalyan Krishnamurthy, CEO of Flipkart Group, said, “This move will help PhonePe maximize its potential as it moves to the next phase of its development, and it will also maximize value creation for Flipkart and our shareholders.”
PhonePe currently has 250 million registered users, the company noted in its statement. Its monthly active users (MAU) number stood at 100 million in October 2020, generating one billion digital payment transactions in the month. This implies each active user transacted ten times on average in October.
As a result of this deal, Flipkart’s stake in PhonePe will come down, but it will remain the majority shareholder in the company. The two companies will continue to collaborate closely, the statement noted.
PhonePe holds the second spot in India’s digital payments ecosystem with a market share of 19.8% as of May 2020, according to a Bernstein report.
Out of the 2.07 billion UPI transactions processed in October, PhonePe recorded 835 million transactions, while Google Pay recorded 820 million, according to TechCrunch.
Shoring up capital to fend off its rivals
PhonePe’s latest fundraising comes at a crucial time. In addition to fueling its next phase of growth, PhonePe also has to fend off its rivals Google Pay, Amazon Pay, and now WhatsApp Pay.
While it is engaged in a neck-to-neck race with Google Pay, PhonePe is also staring at challenges from Amazon Pay, which could soon get over $1.4 billion from its parent company.
Amazon Pay could soon get over a billion dollars to take on Google Pay, Paytm, Phonepe and others
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WhatsApp Pay UPI is now live while Google Pay, PhonePe have already got the first sting