Upcoming IPO: What does PhonePe's ESOP numbers mean for its public offer?

Upcoming IPO: PhonePe IPO, which is said to be one of the most awaited IPOs of 2026, will be hitting the primary market this year, however, the final date and size of issue has not been announced by the company yet. It is to be noted that the company has received markets regulator Securities and Exchange Board of India approval for its IPO. PhonePe IPO details According to company's filing, Walmart plans to reduce its stake in PhonePe by about 12% through the company’s initial public offering, while Tiger Global Management and Microsoft intend to fully exit their holdings. The three investors are expected to sell roughly 50.7 million shares in the offering, and PhonePe will not issue any new shares as part of the IPO. PhonePe, which competes with Google Pay and Paytm in India, filed its draft papers for the IPO in September and is aiming to complete the process by April, according to a Reuters report. However, the timeline could change depending on capital market conditions, including potential impacts from the Middle East conflict. PhonePe's ESOP numbers In a press release the company said that PhonePe’s ESOP structure has been its most effective tool for stability. Here's how - Equity over Cash The company deliberately leaned on equity rather than high cash salaries to incentivize leadership. This kept fixed costs low during the scaling phase while aligning the team’s wealth with long-term shareholder value. Stable Leadership As venture capital experts note, management stability is a "qualitative factor" that investors value as much as financial metrics. The pool is proof that the talent that built the over $10 billion value is staying to grow it further Cash Flow Positive Despite the accounting impact of ESOP expenses, PhonePe remained free cash flow (FCF) positive, generating more than ₹1,200 crore in cash from operations in FY25. The Real Bottom Line Excluding these one-time, non-cash ESOP charges, PhonePe reported an adjusted profit after tax (PAT) of ₹630 crore in FY25, indicating that the company is already profitable in terms that directly affect its cash position. No IPO capital needed, says company As per the release, the IPO is expected to be a 100% Offer for Sale (OFS). PhonePe is not raising any new money to fund operations. “Its current revenue diversification, where non-UPI segments like Insurance and Merchant Services contribute nearly 42% of revenue is generating enough internal cash to fund its next phase of growth,” the company said. The company further added, “PhonePe’s ESOP pool isn't a challenge to solve; it is the receipt for over $10 billion in value created over the last decade. For the market, the real takeaway should be that PhonePe has reached a state of financial maturity where it can reward its builders, generate free cash, and dominate the market, all without needing a single rupee of fresh growth capital.” Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.