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PhonePe may become India’s most valued fintech in new funding round

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Indian fintech PhonePe is tapping General Atlantic to raise  funds at a valuation of $12 billion If PhonePe’s funding round goes through, the Walmart-backed company will become India’s most valued fintech.

PhonePe has entered talks to raise funds in a new round led by General Atlantic with a valuation of more than $12 billion.

A source expects General Atlantic to head the round with a $450-$500 million investment. According to a second source, this is not a pre-IPO round because the company’s public offering is at least 2-3 years away. The round would make Walmart-backed PhonePe  the most valuable fintech in India.

PhonePe plans to utilize the capital collected to further its goals of becoming a financial services super app, covering everything from payments to insurance to investments to commerce. If , PhonePe is successful in the round, it would become a decacorn, or a company worth over $10 billion.

PhonePe’s valuation will also exceed that of Razorpay, the digital payments and neobanking startup, which was recently valued at at $7.5 billion. It will also be a unique case of a late-stage financing during a startup fundraising winter in which investors are signing lesser cheques due to a deteriorating macro climate. Flipkart valued PhonePe at $5.5 billion when it spun it off into an independent firm.

Flipkart had invested $700 million at the time. PhonePe’s fundraising discussions come at a time when its nearest competitor, Paytm, has seen its valuation plummet by more than 60% since it went public in November last year, with public shareholders voicing concerns about the company’s capacity to reach company-level profitability.

Paytm’s entire market capitalization was little under $5 billion as of October 20. However, Paytm generates far more income than PhonePe. The company recorded a revenue of Rs 3,892.40 crore in FY22, whereas PhonePe’s revenue was Rs 1,646 crore.

PhonePe recorded a loss (excluding ESOP charges) of Rs 671 crore for FY22. But, the company’s net loss for the year is projected to be significantly greater. That’s because its net loss including ESOP costs was Rs 1,728 crore, in FY21, while it was Rs 789 crore without it. Meanwhile, Paytm recorded a net loss of Rs 2,325 crore for FY22, up from Rs 1,560 crore in FY21.

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