The investment marks the first tranche of an up to $1 billion total fundraising in January 2023, the company said in a statement. Other global and Indian investors are also participating in the round, it added.
Walmart-owned PhonePe was last valued at $5.5 billion in December 2020 after raising $700 million from the retail major.
ET reported on December 23 that PhonePe was looking to close a funding round of about $1.5-$2 billion where Walmart and General Atlantic were expected to pump in the capital at a $12 billion pre-money valuation.
While the primary fundraising is estimated to be $1 billion in size, the rest will be through a secondary transaction. . In a secondary share sale, existing investors sell their shares to new investors and the money doesn’t go to company coffers.
With the transaction, PhonePe becomes the most valued Indian fintech, surpassing the valuation of digital payments provider, Razorpay which was last valued at $7.5 billion.
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The development follows PhonePe’s recently announced change of domicile to India and its full separation from the Flipkart group.According to PhonePe, it will use the capital to make significant investments in infrastructure, including the development of data centers, and help build financial services offerings at scale.
“We look forward to delivering the next phase of our growth by investing in new business verticals like insurance, wealth management, and lending, while also facilitating the next wave of growth for Unified Payments Interface (UPI) payments in India,’’ said Sameer Nigam, cofounder and chief executive officer (CEO) of PhonePe.
General Atlantic, an investor backing the likes of Byju’s, Unacademy, and other Indian startups, was in talks to invest around $300-400 million in PhonPe, ET had reported citing sources.
“Sameer (Nigam), Rahul (Chari), and the PhonePe management team have pursued a clear mission to drive payments digitalisation and broaden access to financial tools. They remain focused on driving the adoption of inclusive products developed on the open API-based ‘India stack.’ This vision is aligned with General Atlantic’s longstanding commitment to backing high-growth businesses focused on inclusion and empowerment,” said Shantanu Rastogi, managing director and head of India at General Atlantic.
Chari is PhonePe’s cofounder and its chief technology officer.
With PhonePe shifting its domicile to India, the government is likely to gain as much as $1 billion in taxes from Flipkart parent Walmart and other PhonePe shareholders, ET reported earlier this month, citing sources.
While announcing the formal Flipkart-PhonePe separation in December last year, Flipkart group chief executive Kalyan Krishnamurthy also sent a note to employees, informing them of “a one-time discretionary cash payout as part of the transaction” that would come their way.
ET was the first to report on November 29 that Flipkart was planning a $700-million buyback of shares held under employee stock ownership plans (Esop), in what would be the largest share repurchase in the Indian startup ecosystem.
ET also exclusively reported on November 25 that PhonePe was in the final stages of discussion to acquire buy-now-pay-later (BNPL) startup ZestMoney amid a global reset in the BNPL sector.
