India’s PhonePe Aims For $10.5 Billion Valuation in IPO

Indian payments platform PhonePe reportedly hopes to go public at a valuation of $9 billion to $10.5 billion.

This indicates that the Walmart-backed company will raise around $900 million to $1.05 billion, Reuters reported Wednesday (March 4), citing two sources with direct knowledge of the matter.

The report added that this valuation would still represent a downgrade from the $12 billion the company achieved during a 2023 funding round.

PhonePe, whose competitors in India include local players like Paytm as well as Google Pay, filed to go public in September of last year and received regulatory approval for its initial public offering (IPO) in January.

One of the sources told Reuters the company hopes to complete the process by next month, though the timing could depend on changing market conditions, including impact from conflict in the Middle East. According to Reuters, this would be India’s second largest FinTech listing on record, after Paytm’s $20 billion IPO in 2021.

The report notes some of the challenges facing PhonePe ahead of its IPO. Two portfolio managers who met with company management said enthusiasm for India’s FinTech market had waned, and that questions remained about PhonePe’s ability to monetize its customer base.

“Monetization remains a question mark. Active users aren’t growing at the same pace so the game is all about upsell and that remains to be seen,” one of the portfolio managers told Reuters.

A third source from the banking sector said that investors also view the Indian FinTech space as crowded, with little to differentiate the companies involved.

PhonePe’s journey has happened in parallel with the “digital payments journey” that India has been involved in for the better part of two decades, as PYMNTS wrote last June.

“The process was marked by key milestones like the introduction of the instant Unified Payments Interface (UPI) in 2016,” the report said. “The 2016 demonetization further accelerated the transition to digital payments, leveraging the existing trend of Indian citizens using mobile phones for various transactions.”

But the Reuters report points out that payments in India are a low margin business. When the country launched UPI, part of an effort to encourage digital payments and reduce cash use, it blocked companies from charging fees for the instant payment service.

Meanwhile, another major player is apparently set to enter the Indian market. A report last week by Bloomberg News said that Apple had held talks with a trio of banks in India as it plans to bring its digital wallet to the country by mid-year.