SEBI Clears PhonePe IPO: Fintech Giant Prepares for Major Market Debut

According to many media reports, market regulator Securities and Exchange Board of India (SEBI) approved UPI payments market leader PhonePe's initial public offering (IPO) on January 20. PhonePe hopes to generate about INR 12,000 crore (or $1.35 billion) through a pure OFS or offer for sale. The offering is anticipated to be valued at approximately $15 billion. Over the coming days, PhonePe is probably going to submit the revised DRHP, which is a public document. In late September, a digital payments company owned by global retail powerhouse Walmart submitted draft documents for an initial public offering (IPO) through the private pre-filing process to market regulator SEBI. What its means for the company let’s find out.

PhonePe’s IPO will Reflect its Dominance in UPI Payment Sector

In the UPI mobile payment platform, PhonePe has about 45% of the market, while Google Pay, its closest rival, has about 35% of the market. The UPI platform handles about 85% of the nation's digital payments. After competitor Paytm's IPO in late 2021, the public listing of the Bengaluru-based payments juggernaut paves the way for the second-largest new economy listing. PhonePe's IPO proposal is strong because of its steady dominance of the UPI market, despite the payment platform's ongoing influx of wealthy newcomers. 

Because of its robust innovation, expanded use cases, and ongoing expansion, UPI is the nation's most innovative digital payment platform. Every month, PhonePe handles around 10 billion transactions totalling more than INR 12 lakh crore. The business also operates a number of other verticals, including the sale of insurance policies, a loan platform, and the stock market trading app Sharemarket. Payments, which account for more than 90% of PhonePe's overall revenue, remain the company's growth engine despite diversification.

PhonePe’s IPO Planning

Microsoft, Walmart, and Tiger Global are the three shareholders wishing to take part in the selling offer, which will entail a combined dilution of almost 10% of the company's shares. As consultants for a big-bang IPO, Kotak Mahindra Capital, Citi, Morgan Stanley, and JP Morgan were aiming for a listing valuation of up to $15 billion.

Paytm's valuation fell shortly after several experts downgraded the company, despite the fact that its IPO was completely subscribed at a $20 billion valuation and INR 18,000 crore financing. Paytm is currently valued at approximately $9.5 billion. Groww, a wealth-tech platform, went public late last year at a valuation of about $7.5 billion and is currently trading at about $10.5 billion. With a current valuation of almost $9 billion, insurance marketplace PB Fintech's initial public offering (IPO) has been a huge success.