Walmart-owned PhonePe has picked 4 investment banks as advisors for now as India's top digital payments platform moves to join the domestic tech IPO club seeking a valuation of up to $15 billion, multiple industry sources in the know told Moneycontrol on the condition of anonymity.
"PhonePe intends to kick-off the IPO process in the first week of March and has onboarded Kotak Mahindra Capital, JP Morgan, Citi and Morgan Stanley. More advisors are likely to be added at a later stage if required," one of the persons above said.
A second person confirmed the above and added that the IPO was likely to be a combination of primary and secondary issuance of shares, with the listing expected in FY26.
In a kick-off meeting, the issuer firm discusses key plans and the roadmap for the IPO along with the roles and responsibilities for the advisors who are brought together.
According to a third person, " This is expected to be a big tech IPO from a market leader with the issue size likely to be in excess of a billion dollars. These are early days, and the plans may vary later depending on market conditions, but as of now the firm wants to leave money on the table for investors and is eyeing a valuation of upto $15 bn "
A detailed email query from Moneycontrol sent to PhonePe was left unanswered at the time of publishing this article. Email queries have been sent but the i-banks couldn't be reached for an immediate comment. This article will be updated as soon as we hear from all the firms.
To be sure, the company hit a pre-money valuation of $12 bn in its last private fundraising in early 2023.
"PhonePe has attracted an incredible set of high quality, marque investors, who have invested over Rs 18,000 crore in the company till date," the firm said in its FY24 annual report.
Walmart is the majority shareholder and other investors include the likes of Microsoft, General Atlantic, Tiger Global, Ribbit Capital, TVS Capital, Tencent and Qatar Investment Authority.
Incidentally, the share price of listed fintech peer One 97 Communications Limited which owns and operates the brand Paytm, has risen by 72.28 per cent in the last year.
Road to a mega IPO
On February 20, PhonePe announced that it is starting preparatory steps for a potential initial public offering (IPO) to list on the Indian exchanges.
"PhonePe, our fintech business, is making preparations for an IPO in India. Our PhonePe team has long aspired to be a public company and we are excited to be taking these early steps," said Doug McMillon, CEO of Walmart.
PhonePe redomiciled from Singapore to India in December 2022. The company said it has established a clear corporate structure with each of its new non-payment businesses as fully owned subsidiaries.
"PhonePe's strong top-line and bottom-line growth across its diverse business portfolio, as detailed in its FY23-24 annual report, makes this a suitable time to prepare for a public listing" the company said.
Bengaluru-based PhonePe is the country's largest digital payments player with nearly 48 percent market share in Unified Payments Interface (UPI), the real-time mobile payments platform run by NPCI (National Payments Corporation of India). Google Pay is the second largest player with a market share of around 37 percent.
NPCI had earlier mandated that no single non-bank third-party app should have more than 30 percent of the market, in a bid to encourage other apps and create competitive intensity amid the duopoly scenario.
However, the organization was forced to extend the deadline twice, for a period of two years to avoid inconvenience to customers. "Considering various factors, the timeline for compliance of existing TPAPs who are exceeding the volume cap, is extended by two years i.e. till December 31, 2026," the RBI said in a circular on December 31.
In FY24, PhonePe reported a 73 percent year-on-year increase in revenue at Rs 5,064 crore on the back of cost efficiency and product diversification. The PhonePe Group recorded adjusted Profit After Tax (PAT) of Rs 197 crore, against a loss of Rs 738 crore in the previous year.
At the Moneycontrol Startup Conclave on August 9 in Bengaluru, PhonePe Co-founder and CEO Sameer Nigam had added that the company will go for a public listing only if it can report net profit sustainably.
"At PhonePe, our ambition is to build internet platforms that help all Indian citizens improve their lives, realize their aspirations and unlock their true potential," Nigam said in the firm's last annual report.
More on PhonePe
The leading digital payments app was launched in August 2016 and since then the PhonePe Group has expanded into financial services - Insurance, Lending, & Wealth as well as new consumer tech businesses - Pincode and Indus Appstore.
"As of March 2024, we have about 53 crore registered users, , approximately 20 crore monthly active customers, 50 plus lakh net payment devices deployed and we process 770+ crore transactions monthly amounting to Rs 10.5 lakh crore in total payment value," the firm said in its FY24 annual report.
The annual report added, "In the last few months, we have expanded globally with partnerships in 6 countries (Singapore, United Arab Emirates, Nepal, Sri Lanka, Bhutan and Mauritius), thus enabling UPI payments for our consumers traveling abroad."
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