PhonePe Eyes $10.5 Billion Valuation for Upcoming IPO

Depending on the outcome of the present volatile geopolitical climate, fintech giant PhonePe plans to launch its initial public offering (IPO) by next month. The public listing, which just includes an offer-for-sale component, is expected to garner between $900 million and $1.5 billion for the Bengaluru-based business. After receiving $100 million in equity capital in 2023, PhonePe's valuation dropped from $900 million to $10.5 billion, a significant drop from its previous valuation of $12 billion. So far, the business has managed to raise approximately $2.3 billion.

PhonePe Revamping its Investors’ Portfolio

It is important to note that the IPO is not a means for PhonePe to raise capital; rather, it is a means for selling shareholders, including Walmart, to access liquidity. From its 71.77% ownership in the business, Walmart is selling 5.06 Cr equity shares, reducing its position by almost 12%. It will maintain its position as the biggest stakeholder, with Microsoft and Tiger Global each owning less than one per cent.

Microsoft and Tiger Global are pulling out of PhonePe completely. In contrast, the startup's revised DRHP from January states that 3State Ventures, General Atlantic Singapore, and Headstand Pte Ltd have opted to keep their names on the cap table. After becoming a public company in September of last year, PhonePe submitted confidential draft papers. Its IPO will bring it into the same league as other fintechs on the Nasdaq, including PB Fintech, Groww, and its main competitor, Paytm.

Recent Financial Report Card of PhonePe

The first half of the current financial year saw a 22% increase in operational revenue to INR 3,918.5 cr, while PhonePe's deficit extended 20% year-on-year to INR 1,444 cr. Beyond low-margin UPI payments, the firm is aiming to diversify. Its entire revenue mix in H1 FY26 was composed of 63.8% consumer payments and 21.8% merchant payments. Comparatively, in H1 FY26, lending and insurance distribution only accounted for 6.3% of its total revenue.

Due to the superior monetisation streams provided by merchant payment layers, analysts have predicted that these will generate far more revenue than consumer payment options. Among these sources were platform fees, loans, EMI partnerships, and offline development driven by devices. Paytm has already committed to this vertical as the foundation for its future growth, but PhonePe is making great strides to catch up. When PhonePe enters the public markets, everyone will be watching to see if it can become profitable and stand out from the competition.