PhonePe Raises Another $100 Mn From General Atlantic As Part Of $1 Bn Plan

Walmart-owned PhonePe has secured an additional $100 million investment from General Atlantic, a leading global growth equity firm, at a pre-money valuation of $12 billion. This new funding is part of PhonePe’s ongoing fundraise of up to $1 billion in capital, following its domicile shift to India last year. With this tranche, the company has raised a total of $850 million from several global investors. This includes a total of $550 million from General Atlantic alone.

This February, the Bengaluru-based unicorn raised $350 million from General Atlantic at a pre-money valuation of $12 billion, making it India's most-valued fintech player. Other investors that backed PhonePe include Qatar Investment Authority, Microsoft, Tiger Global and a few small hedge funds. Pre-money valuation is the value of a company before it goes public or receives other investments such as external funding or financing. PhonePe raised another $100 million in primary capital from Ribbit Capital, Tiger Global and TVS Capital Funds in the same month.

In March this year, PhonePe raised an additional $200 million in primary capital from its parent Walmart, at a pre-money valuation of $12 billion. In April, PhonePe again raised $100 million from General Atlantic.

PhonePe was valued at about $5.5 billion in December 2020 after raising $700 million in primary capital from existing Flipkart investors including Tiger Global, and Walmart.

PhonePe plans to use the funds to scale its payments and insurance businesses in India, according to the sources. It will also launch and aggressively scale new businesses like lending, stock broking and Open Network for Digital Commerce (ONDC)-based shopping over the next few years.

For instance, PhonePe recently entered e-commerce with the launch of a shopping app, Pincode, on the government-backed ONDC platform. The app focuses on hyper-local commerce. PhonePe is competing with players such as Amazon, Reliance’s JioMart and Tata-owned BigBasket in the e-commerce space. This segment is set to grow to $350 billion by 2030.

Pincode recently surpassed 50,000 installs on the Play Store, within a month of launch. Pincode has quickly risen to become one of the top 50 Android apps on the Play Store and is also among the top 10 apps on the App Store. In addition to this milestone, Pincode has been processing over 5,000 orders per day, showcasing strong customer preference and the app's growing popularity in Bengaluru, where it currently serves customers.

PhonePe also recently went live with the UPI LITE feature on its app, allowing users to initiate low-value payments under Rs 200. The feature can be used with a single tap in UPI LITE accounts without entering a PIN, a passkey.

This month during an earnings call, Walmart said that PhonePe, which was hived off from Flipkart, crossed an annualised payments volume of $1 trillion.

“For India, a group of us were there last week, and we (are) even more excited about our opportunities,” said Doug McMillon, president and Chief Executive Officer (CEO), Walmart Inc, in a conference call. “Flipkart and PhonePe are doing well. Our Walmart tech team there is strong.”

PhonePe was founded in December 2015 and has emerged as India’s largest payments app, enabling digital inclusion for consumers and merchants alike. With over 450 million registered users, one in four Indians are now on PhonePe. The company has also successfully digitized 35 million offline merchants spread across Tier 2,3,4 and beyond, covering 99 per cent  pin codes in the country.

PhonePe is also leading in Bharat Bill Pay System (BBPS) space, processing over 45 per cent of the transactions on the BBPS platform. PhonePe forayed into financial services in 2017, providing users with safe and convenient investing options on its platform. Since then, the company has introduced several Mutual Funds and Insurance products that offer every Indian an equal opportunity to unlock the flow of money and access to services.