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

Walmart-backed Indian fintech firm PhonePe, the country's most used payments platform, is aiming to list at a valuation of between $9 billion and $10.5 billion, two people with direct knowledge of the matter said.

That suggests the IPO will raise about $900 million to $1.05 billion. But even at the top end, the deal would mark a cut from the $12 billion valuation at which PhonePe last raised $100 million in private markets in 2023.

Walmart will trim its stake in PhonePe by about 12% in ‌the firm's initial ⁠public ⁠offering, while Tiger Global and Microsoft plan to exit their stakes, according to the firm's IPO filing.


The three firms will sell around 50.7 million shares in the offering and PhonePe will not issue any new shares.

PhonePe, which competes with Google Pay and Paytm in India, filed for its IPO in September and aims to complete the process by April, one of the sources said, although the timeline could shift depending on capital market conditions, including any impact from the Middle East conflict.

Both sources requested anonymity as the discussions are confidential. PhonePe, Walmart, ⁠Tiger Global, ‌and Microsoft did not immediately respond to emails seeking comment.

The expected valuation of PhonePe, which means "on the phone" in Hindi, and timing of the issue have not been previously reported.

PhonePe's listing would ⁠make it India's second-largest fintech IPO, behind Paytm's about $20 billion listing in 2021.

Paytm currently trades at a market capitalisation of $7.1 billion.

Monetisation remains a question mark

PhonePe has more than 650 million registered users and processed nearly 10 billion of the 21.7 billion transactions on India's unified payments interface (UPI) in January, regulatory data showed. But payments in India remain a low-margin business.

India launched UPI in 2016 and barred companies from charging fees for the instant payment service to spur digital payments and reduce cash use in Asia's No.3 economy.

PhonePe's losses widened to Rs 14.44 billion ($158 million) in the six months ‌ended September 30, from Rs 12.03 billion a year ago, while revenue rose about 22% to Rs 39.18 billion, the firm's IPO filing showed.

Two portfolio managers, who met the company's management in pre-IPO roadshows, said excitement around the ⁠country's fintech sector had cooled and that there were lingering questions around PhonePe's ability to monetise its user base - a key reason it may not achieve a valuation closer to its last funding round.

"Monetisation remains a question mark. Active users aren't growing at the same pace so the game is all about upsell and that remains to be seen," one of the portfolio managers said.

Investors also see India's fintech market as overcrowded with little differentiation among players, said a third source, a banker to the issue.

These sources also spoke on the condition of anonymity as they were not authorised to speak to media.

($1 = 92.1730 Indian rupees)