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PhonePe looks to secure $1B from General Atlantic, Tiger Global, others

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PhonePe is looking to secure as much as a billion dollars from General Atlantic and existing investors. The all-equity transaction, which is anticipated to finish within the next two weeks, may raise PhonePe’s valuation to about $13 billion when fresh investment is included in.

People familiar with the situation stated that PhonePe, a digital payments company owned by Walmart Inc., is looking to secure up to $1 billion from General Atlantic as well as its existing investors. Tiger Global Management, Microsoft Corp., and the Qatar Investment Authority, are among the existing investors.

The all-equity transaction is anticipated to finish within the next two weeks. The transaction is expected to raise PhonePe’s valuation to about $13 billion, which includes the fresh money committed. The price puts PhonePe among the most valuable brands in India in a market for digital payments that Boston Consulting Group predicts will quadruple in size to $10 trillion by 2026.

Walmart will continue to be the business’s largest investor. However, it is in discussions with SoftBank Group Corp.’s Vision Fund, an investor in PhonePe’s holding company Flipkart. Portfolio losses have forced SoftBank to take a defensive stance and drastically reduce its investments this year.

Emails requesting PhonePe’s response to the fundraiser were not returned.

PhonePe, which has its headquarters in Bangalore, would now be worth more than Paytm’s parent company One97 Communications Ltd., whose market capitalization has fallen to $4 billion, or roughly 70% less than when it first entered the market a year ago. Competition is intensifying between PhonePe, Paytm, Google Pay and Amazon Pay from Alphabet Inc. and Amazon.com Inc., as well as a number of startups hoping to profit from India’s rapidly digital economy.

Moreover, SoftBank supports Paytm.

According to one of the persons, PhonePe is getting closer to profitability in its primary business.

The company reported that in the fiscal year that ended in March, revenue at the player in digital payments increased by roughly 140% to 16.5 billion rupees ($200 million), while losses shrank by around 15%.

India’s startup sector is still suffering from a capital shortage; as valuations fall, businesses are laying off thousands of employees and postponing ambitions to go public. PhonePe moved its headquarters from tax-friendly Singapore to India in order to get ready for an initial public offering, which the individuals indicated is at least 18 to 24 months away.

Instead of being a part of Flipkart, the firm will be a separate organisation directly under Walmart’s control, they claimed.

PhonePe, founded by Rahul Chari and Burzin Engineer, was quickly purchased by Flipkart.

When Walmart acquired Flipkart for $16 billion in 2018, the US retailing behemoth also acquired PhonePe. As of last month, the firm has 30 million registered merchants in India and 415 million registered users.

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