Walmart-backed PhonePe targets up to $10.5 billion valuation in IPO

PhonePe Aims for $9-$10.5 Billion Valuation in Upcoming IPO

Walmart-backed fintech firm PhonePe is planning to list at a valuation of between $9 billion and $10.5 billion, according to sources familiar with the matter.

The IPO is expected to raise approximately $900 million to $1.05 billion, marking a cut from the $12 billion valuation at which PhonePe last raised $100 million in private markets in 2023.

Key Details of the IPO:

• Valuation Range: $9 billion to $10.5 billion
• Expected IPO Proceeds: $900 million to $1.05 billion
• Walmart's Stake Reduction: Approximately 12%
• Exiting Investors: Tiger Global and Microsoft
• Number of Shares Sold: Around 50.7 million shares

PhonePe's Competitors and Market Performance:

PhonePe competes with Google Pay and Paytm in India, the latter of which has a market capitalization of $7.1 billion. If successful, PhonePe's listing would make it India's second-largest fintech IPO, behind Paytm's $20 billion listing in 2021.

Monetization Concerns:

PhonePe has over 650 million registered users and processed nearly 10 billion transactions on India's unified payments interface (UPI) in January. However, payments in India remain a low-margin business, and PhonePe's losses widened to ₹1444 crore in the six months ended September 30, from ₹1203 crore a year ago.

Industry experts have expressed concerns about PhonePe's ability to monetize its user base, citing a lack of growth in active users and difficulties in upselling. The fintech market in India is also seen as overcrowded with little differentiation among players.

PhonePe aims to complete the IPO process by April, although the timeline may be affected by capital market conditions and the ongoing Middle East conflict.