PhonePe Begins Preparations for IPO, Eyes Public Listing in India The Bengaluru-based fintech leader, which dominates the Unified Payments Interface (UPI) ecosystem, is poised to become the latest tech unicorn to go public.
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Walmart-owned digital payments giant PhonePe has begun early-stage preparations for a potential initial public offering (IPO) in India, marking a significant milestone in its growth journey. The Bengaluru-based fintech leader, which dominates the Unified Payments Interface (UPI) ecosystem, is poised to become the latest tech unicorn to go public.
Doug McMillon, CEO of Walmart, confirmed the development, stating, "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."
This move comes after PhonePe's strategic redomiciliation from Singapore to India in December 2022. The company has since restructured its operations, forming separate subsidiaries for its various non-payment businesses, setting the stage for a public listing.
PhonePe's decision to explore an IPO is backed by robust financial performance. In FY24, the company posted a 73% year-on-year surge in revenue, reaching INR 5,064 crore, driven by cost efficiencies and product diversification. It also turned profitable, recording an adjusted Profit After Tax (PAT) of INR 197 crore, a major turnaround from a INR 738 crore loss in the previous year.
Valued at approximately USD 12 billion in its last private fundraising round, PhonePe remains India's largest UPI payments player, controlling nearly 48% of the market. Its closest competitor, Google Pay, holds a 37% market share. However, the National Payments Corporation of India (NPCI) has been working to enforce a 30% cap on market share for non-bank third-party UPI apps. The deadline for compliance has been extended twice, now set for December 31, 2024.
PhonePe CEO and co-founder Sameer Nigam had previously expressed concerns about going public amid regulatory uncertainties. "The UPI market cap overhang is definitely a problem for us. I feel nervous going into the market if there's a 30% market share cap lurking or booming," Nigam had stated.
While industry experts speculate that the cap may never be implemented, the timing of PhonePe's IPO will likely align with the expiry of NPCI's deadline extension. The company's sustained profitability and market dominance could make its public debut an attractive proposition for investors.
As PhonePe progresses with its IPO plans, its performance in the coming quarters will be closely watched, with investors eager to see how the company navigates regulatory challenges while maintaining its growth momentum.
