PhonePe, India's leading digital payments platform backed by Walmart, is reportedly gearing up for a significant move into the public market. The fintech giant is preparing to file preliminary documents for an initial public offering (IPO) that could potentially raise $1.5 billion. According to sources familiar with the matter, the draft red herring prospectus (DRHP) is expected to be submitted as early as August. This IPO could value PhonePe at approximately $15 billion.
Founded in 2015, PhonePe has rapidly risen to prominence in India's booming digital payments landscape. The platform boasts over 610 million registered users and processes 340 million transactions daily, highlighting its widespread adoption across the country. These figures underscore PhonePe's crucial role in facilitating financial transactions for millions of Indians and its significant contribution to the country's digital economy.
PhonePe's journey towards an IPO has been marked by strategic decisions and impressive financial performance. In 2023, the company secured $100 million in funding from prominent investors, including Ribbit Capital, Tiger Global Management, and TVS Capital Funds, valuing the company at $12 billion at the time. Furthermore, PhonePe has demonstrated robust revenue growth and improved profitability in recent years. In fiscal year 2023-24, the company reported revenues exceeding ₹5,000 crore, representing a 74% increase year-on-year. The company also achieved an adjusted profit after tax (PAT) of ₹197 crore, a significant turnaround from the ₹738 crore loss reported in the previous fiscal year.
To manage the complexities of the IPO process, PhonePe has enlisted the expertise of leading investment banks, including Kotak Mahindra Capital, JPMorgan Chase & Co., Citigroup Inc., and Morgan Stanley. These institutions will play a crucial role in guiding PhonePe through the regulatory requirements, investor relations, and overall execution of the public offering.
The potential IPO of PhonePe has garnered significant attention and is viewed as a bellwether for India's fintech industry. The success of the offering could pave the way for other digital payments companies to tap into the public markets for funding and expansion. The IPO is expected to provide PhonePe with substantial capital to fuel its growth ambitions, including expanding its reach in financial services, digital commerce, and emerging technologies like AI-driven credit scoring and voice-enabled transactions.
Moreover, PhonePe's IPO is seen as a potential indicator of a turnaround in India's fintech funding landscape. The company's preparation for public markets follows strategic moves including redomiciling from Singapore to India in 2022, achieving its first profit before employee stock options of ₹197 crore, and growing revenue by 74% to ₹5,064 crore in FY24. This potential listing would make PhonePe the third major Indian fintech to go public after Paytm and MobiKwik, potentially opening doors for other startups as analysts predict Indian startups could raise a record ₹55,000 crore through IPOs in 2025.
While the IPO plans are progressing, it is important to note that the discussions are still ongoing, and the timeline and valuation are subject to change. Nevertheless, the anticipation surrounding PhonePe's potential public offering underscores the company's strong position in the Indian digital payments market and the growing investor interest in the country's fintech sector.
