Walmart is looking forward to getting the ball rolling for the initial public offer (IPO) of its Indian fintech arm PhonePe, CEO Doug McMillon said on February 20.
“I’d like to share the news that 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,” McMillon told analysts while discussing the company’s Q4FY25 results.
The Bentonville-based retail giant had acquired PhonePe in August 2018 as part of its acquisition of Flipkart. The fintech major operated as a subsidiary of Flipkart until it separated from the e-commerce firm in December 2022, when it redomiciled from Singapore to India.
While announcing its listing plans, PhonePe said it has established a clear corporate structure with each of its new non-payment businesses as fully owned subsidiaries. PhonePe was valued at around $12 billion in its last private fundraising.
Kathryn McLay, President and CEO, Walmart International, said that PhonePe’s IPO is a significant milestone for the company, which will also be celebrating its tenth-year anniversary this year.
“The PhonePe business, by the end of 31st January, hit $1.7 trillion in total payment volume (TPV), and they have around 310 million transactions daily. It is a very strong business and we are excited to make the announcement that they are going to commence their preparation towards IPO,” she said.
The Bengaluru-based company is the country's largest digital payments player with close to 48 percent market share in Unified Payments Interface (UPI), the real-time mobile payments platform run by National Payments Corporation of India. Google Pay is the second largest player with around 37 percent of the market.
The payments firm's revenue growth has been encouraging and could have been a deciding factor for the company to go ahead with the IPO plan. In FY24, the Bengaluru-based company reported a 73 percent year-on-year increase in revenue at Rs 5,064 crore on the back of cost efficiency and product diversification. PhonePe Group recorded adjusted Profit After Tax (PAT) of Rs 197 crore, against a loss of Rs 738 crore in the previous year.
PhonePe founder Sameer Nigam previously said that the company will go for a public listing only if PhonePe can report net profit sustainably over some time. The latest move is an indication that the company has been able to manage its profitability during the current fiscal as well.
In parallel, the company has also been grappling with uncertainty on the UPI market share cap.
NPCI has been trying hard to encourage other fintech apps to make UPI more competitive to dislodge the duopoly. The organisation had earlier mandated that no single non-bank third-party app should have more than 30 percent of the market.
However, NPCI was forced to extend the deadline twice, for a period of two years as the implementation plan would likely inconvenience customers with the latest being on December 31, 2024.
Nigam had previously indicated that the company would not go for an IPO until there was clarity on the market share cap. "The UPI market cap overhang is definitely a problem for us. I feel nervous going into the market if there’s a 30 percent market share cap lurking or booming and going and asking retail investors to put money against today’s market share of PhonePe," he explained.
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