PhonePe raised another $100 million as part of an ongoing cyclea deliberation that has already brought in $450 million despite the market crash, as the Indian fintech giant swells its war chest following the recent separation from parent company Flipkart.
Ribbit Capital, Tiger Global and TVS Capital injected the new $100 million into the startup. The current round values Bengaluru-headquartered PhonePe at a pre-money valuation of $12 billion. Walmart-backed PhonePe previously said it plans to raise up to $1 billion in the current funding round.
“We are delighted to continue our partnership with PhonePe as they are leading the digital payments industry in India, a market which we believe is still in its infancy with significant growth potential,” said Scott Shleifer, partner at Tiger Global, in a statement.
With a valuation of $12 billion, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm. Paytm, which plans to hit $1 billion in revenue by March this year, is currently valued at $4.5 billion.
PhonePe, of course, is the clear market leader in mobile payments on UPI, a network built by a coalition of retail banks in India. UPI has become the most popular way for Indians to transact online and processes over 8 billion transactions per month. Seven-year-old PhonePe controls about 50% of all these transactions.
A concern for PhonePe’s growth was that Indian regulators were applying market capitalization controls to each player, but the deadline for the new guidelines was extended last month and now will not come into force until 2025giving PhonePe another two years of rapid growth.
PhonePe is slowly using its large base of 300 million users to sell them a range of products, including insurance. There is also speculation that PhonePe could eventually try to become a bank, which partly better justifies its current valuation. PhonePe recorded revenue of $234.3 million in the first nine months of 2022.
PhonePe forecasts revenue of $325 million in calendar year 2022 and $504 million in 2023, according to a valuation report prepared by audit firm KPMG and filed by PhonePe last month.
The startup does not expect positive EBIDTA, a key measure of profitability, until calendar year 2025, KMPG wrote in its valuation report. PhonePe’s financials and metrics from the valuation report have not been previously released.
“We are privileged to have a large number of leading global investors, existing and new, who believe in our mission to build massive technology platforms to bring financial and digital inclusion to India at scale,” said Sameer Nigam, co-founder and managing director of PhonePe, in a statement.