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India’s PhonePe receives new capital valued at over $12 billion

In a recent investment round, PhonePe’s valuation almost doubled to over $12 billion as the Indian fintech powerhouse prepared for life without parent group Flipkart. A remarkable accomplishment at a period when fundraising action has decrease down worldwide as investors get concerned, the Bengaluru-based firm reported obtaining $350 million and expects to raise up to $650 million as portion of the round.

The investment’s initial round was spearheaded by General Atlantic. The investment round has not yet been given a name by the corporation, although it was estimated at $12 billion before money was invested. Last month, TechCrunch reported that PhonePe was completing a significant investment round with a $12 billion pre-money potential.

Certainly, PhonePe’s valuation of $12 billion is astounding considering that  in the late 2020 , it was only worth $5.5 billion. The annual income of PhonePe is currently less than $450 million. The market valuation of publicly listed rival Paytm, which predicts $1 billion in sales in the fiscal year ending in March 2023, is currently $4.2 billion.

Since that Walmart owns a majority stake in PhonePe, it is expected that it will take part in the current investment round.

Undoubtedly, PhonePe is the industry leader for mobile payments on the UPI network, which was created by a group of Indian retail banks. UPI now processes more than 7 billion transactions a month, making it the most widely used online payment method in India. Over 40% of these transactions are made using the seven-year-old PhonePe. More than 35 million online sellers use the platform, according to the firm, which claims to have more than 400 million customer accounts.

Indian regulators placing a market cap control on each player was a worry for PhonePe’s expansion, but the due for the new rules was delayed last month and won’t now take effect till 2025, giving PhonePe further two years of rapid growth.

“I want to express my gratitude to General Atlantic and all of our supporters, both old and new. The Indian digital ecosystem has become a global model because to this effective public-private collaboration, and PhonePe is happy to play a leading role in the nation’s digitalization efforts. According to Sameer Nigam, CEO and  founder of PhonePe, “We are an Indian company, developed by Indians, and our most recent fundraising will assist us further advance the Government of India’s ambition of digital financial equality for all.

“We are excited to deliver the next stage of our development by investment in better business areas like Lending,  Insurance, Wealth Management, and it also facilitate the next phase of growth for UPI payment systems in India,” the company said.

After PhonePe was established in 2015, Flipkart, a major online retailer, purchased it. Flipkart no longer has a share in the payments company as a result of the two parties’ separation last month. The valuation of Flipkart will be somewhat impacted by the separation. $3.6 billion was raised by  Flipkart Group  in July of last year at a $37.6 billion value. According to a previous TechCrunch article, Flipkart has no plans to return to the mobile payments sector.

India’s payments market, which Credit Suisse predicts would grow from $200 billion in 2020 to $1 trillion in the following two to three years, is at risk. One group of players spending a lot of money to dominate the market is Google and Meta.

The payments company also moved its headquarters to India, which resulted in a significant tax event for its shareholders. Walmart announced this month that it has settled the majority of the almost $1 billion in taxes due to the Indian government as a result of PhonePe moving its headquarters from Singapore.

PhonePe declared that it would use the fresh capital to expand its infrastructure spending, including the construction of data centres and more financial services. The organisation also intends to make investments in brand-new industries like financing, wealth management, and insurance.

“Sameer,honePe and Rahul management team have worked to advance the digitalization of payments and greatly increase Indians’ access to financial resources. They continue to be committed to promoting the usage of inclusive solutions built on the “India stack,” which is based on open APIs, according to a statement from head of India managing director ,Shantanu Rastogi  at General Atlantic.

“This goal is consistent with General Atlantic’s steadfast dedication to supporting high-growth companies that are committed to inclusiveness and empowerment. We are thrilled to collaborate with the PhonePe team to support India’s next wave of digital innovation.

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