MC EXCLUSIVE PhonePe gets SEBI nod for India's second largest fintech IPO, likely to seek $15-billion valuation

PhonePe gets Sebi approval for IPO

• PhonePe gets SEBI approval for IPO, aiming for $15 billion valuation
• Company plans to raise Rs 12,000 crore via offer for sale
• PhonePe holds 45% UPI market share, processing 10 billion transactions monthly

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UPI payments market leader PhonePe has received market regulator Securities and Exchange Board of India (SEBI) approval for its initial public offering (IPO) on January 20, according to a couple of sources.

The offering is expected to value PhonePe at around $15 billion, and the company is looking to raise around Rs 12,000 crore ( $1.35 billion) through a pure OFS or offer for sale, Moneycontrol exclusively reported.

PhonePe is likely to file the updated DRHP, a public document, over the next few days. Global retail giant Walmart-owned digital payments firm filed draft papers with market regulator SEBI for IPO via the confidential pre-filing route in late September.

Second-largest New Economy IPO

The public listing of the Bengaluru-based payments giant sets the stage for the second-largest new economy listing after rival Paytm’s IPO in late 2021. Noida-based Paytm’s IPO valuation was around $20 billion, with the IPO size of around Rs 18,000 crore.

Food and grocery delivery platform Swiggy’s IPO size was around $1.35 billion, with the company raising Rs 11,300 crore in November 2024.

Dominant player in UPI

PhonePe has around 45 percent market share in the mobile payments platform, UPI, with its nearest competitor, Google Pay, holding around 35 percent market share. More than 85 percent of the country’s digital payments are processed by the UPI platform.

The consistent dominance of the UPI space, even as the payment platform continues to see new entrants with deep pockets, is what makes PhonePe’s IPO bid strong.  The continued growth of the platform, along with newer use cases and strong innovation, makes UPI an unrivalled platform for digital payments in the country.

PhonePe processes close to 10 billion transactions worth over Rs 12 lakh crore every month.

The company also has multiple other verticals, from a stock market trading app share.market, lending platform and sale of insurance policies, among others.

Despite diversification, payments continue to anchor PhonePe’s growth, accounting for over 90 per cent of its total revenue.

Sellers in the IPO

Walmart, Tiger Global and Microsoft are the three shareholders looking to participate in the offer for sale, which will involve a combined dilution of around 10 per cent stake.

Kotak Mahindra Capital, Citi, Morgan Stanley, and JP Morgan, as advisors for a big-bang IPO, were targeting a listing valuation of up to $15 billion.

Fintech IPOs

While Paytm’s IPO was fully subscribed at $20-billion valuation and Rs 18,000-crore fundraising, its valuation plummeted soon after as multiple analysts downgraded the stock. Paytm’s current valuation is around $9.5 billion.

Wealth-tech platform Groww listed late last year at around $7.5-billion valuation and is now trading at a valuation of around $10.5 billion.

Insurance marketplace PB Fintech IPO has been a big success, with the company’s current valuation at around $9 billion, compared with the $6 billion it listed at.

The initial public offering (IPO) of Pine Labs closed for public subscription on November 11 after being subscribed nearly 2.5 times its offer size on its third and final day of bidding.  The total issue size is estimated at Rs 3,900 crore. This includes a fresh issue of shares worth Rs 2,080 crore, and an offer-for-sale of 8.23 crore equity shares by key investors including Peak XV Partners, Macritchie Investments, Madison India, Mastercard, and PayPal.