Razorpay to pay Rs 1,245 crore in taxes to flip back to India, IPO likely in 18-24 months

Banner Image_Harshil Mathur & Shashank Kumar, Co-founders of Razorpay

Fintech unicorn Razorpay will likely pay approximately Rs 1,245 crore (around $150 million) in taxes to the Indian government as part of its reverse flip process that involved shifting its domicile from the US to India, according to people familiar with the matter.

The company, which operates in the payments space, will make this tax payment using internal cash reserves, sources told Moneycontrol, adding that Razorpay is not looking to raise fresh capital to cover the liability.

The firm is targeting an IPO within the next 18-24 months, said sources, adding that the fintech remains well-capitalised to support operations and growth ambitions. Bankers for the IPO are yet to be appointed.

Razorpay, backed by marquee investors such as Y Combinator and Peak XV Partners, had initiated the reverse flip process in May 2023 to align its corporate structure with its future listing goals in India.

Moneycontrol reported first on May 29 that the reverse flip was officially completed, which involved merging the company’s US-registered parent with Indian subsidiary, Razorpay Software India, bringing the company’s headquarters under Indian jurisdiction.

In the fintech space, Groww, which recently completed its reverse flip paid Rs 1,340 crore in domicile taxes in FY24. Similarly, PhonePe paid around Rs 8,000 crore for reverse flipping to India.

Razorpay has been profitable in its core payments business, and reported a 24 percent growth in revenue at Rs 2,068 crore during FY24. Its total income had crossed Rs 2,501 crore last fiscal, the company said in a statement. The fintech firm, valued at $7 billion, also reported a 4.7-times growth in net profit, which stood at Rs 35 crore in FY24.

The good growth in FY24 came even as the company was asked by the banking regulator to stop onboarding new customers, until the final approval for the payment aggregator licence, which came during the second half of FY24.