India's leading fintech company, PhonePe, has accelerated the process for its highly anticipated Initial Public Offering (IPO). The digital payment service provider is preparing to file its Draft Red Herring Prospectus (DRHP) with the market regulator, SEBI, shortly.
PhonePe, a major player in India's digital payment ecosystem, is gearing up to enter the stock market. Backed by American retail giant Walmart, this fintech company is poised to launch its IPO soon. Sources suggest the company might file its DRHP with the Securities and Exchange Board of India (SEBI) in early August 2025.
This IPO is expected to be worth approximately $1.5 billion (around ₹12,500 crore), potentially valuing the company at around $15 billion. This offering is likely to be one of the most talked-about IPOs in the Indian startup sector in 2025.
Engaging Leading Investment Bankers
PhonePe has engaged some of the most reputable investment banks nationally and internationally to successfully manage its IPO. These include giants such as Kotak Mahindra Capital Company, JPMorgan Chase & Co., Citigroup Inc., and Morgan Stanley. These banks will serve as lead advisors and underwriters for the company's IPO process.
However, sources indicate that some changes to the plan are still possible as the company considers various options. Negotiations are ongoing between company officials and potential investors to strike a balance between market conditions and valuation.
PhonePe's Journey So Far
Founded in 2015, PhonePe has become one of India's largest digital payment companies. The company claims to have over 610 million registered users. Its user base continues to grow, particularly in smaller towns and rural areas.
According to the company, transactions exceeding ₹34 crore are processed daily through its platform. In 2023, PhonePe secured $100 million in funding from Ribbit Capital, Tiger Global Management, and TVS Capital Funds, subsequently boosting its valuation to $12 billion.
India's Largest UPI Platform
The Unified Payments Interface (UPI) has become the dominant mode of digital payment in India, and PhonePe is its leading player. According to data from the National Payments Corporation of India (NPCI), PhonePe alone accounts for approximately 50% of all UPI transactions in India.
Google Pay holds the second position, followed by Paytm. Google Pay and PhonePe together control roughly 80% of the total UPI transaction market share. This dominance makes PhonePe virtually unassailable in the digital financial services sector.
Objectives of the IPO
PhonePe's IPO aims to fund expansion plans, launch new products and services, invest in technology, and potentially pursue acquisitions. Furthermore, the IPO will provide the company with access to capital from the public market and offer long-term stakeholders an exit or opportunity to book partial profits.
This move will also enhance PhonePe's transparency, trust, and brand value, further solidifying its position in the Indian financial services landscape.
A Significant Sign for the Startup Sector
PhonePe's move is a significant indicator for the Indian startup sector. While some large tech company IPOs in recent years received mixed responses, the market is gradually stabilizing, and investor confidence is returning.
A successful PhonePe IPO will encourage other unicorns and growth-stage startups to consider public markets. This will diversify India's capital market and offer investors opportunities to participate in new tech companies.
A Crucial Deal for Walmart
American retail giant Walmart holds a significant investment in PhonePe. This IPO is likely to yield substantial returns for Walmart. Walmart acquired its stake in PhonePe during its 2018 acquisition of Flipkart, subsequently operating PhonePe as an independent brand.
Walmart's strategy now centers on maintaining its foothold in India's rapidly growing digital payments market while delivering b returns to investors.
Plans and Expansion
PhonePe's ambitions extend beyond UPI. The company is rapidly expanding into insurance, mutual funds, digital gold, credit score checks, bill payments, tax payments, and micro-credit. Furthermore, the company is actively working to bring small Indian businesses into the mainstream of digital payments.
PhonePe has recently signaled its intention to strengthen its NBFC (Non-Banking Financial Company) unit. This could facilitate its entry into areas such as digital loans and consumer credit in the future.
