Exclusive: PhonePe rakes in Rs 405 Cr from Singapore’s holding entity

Digital payments space in India has been going through intense competition over the past two years. The trio - Paytm, Google Pay and PhonePe have been bleeding profusely to command more market share. Since the payments is a high burn game, they require to keep raising big financing rounds on periodic intervals.

While Paytm and PhonePe are in talks with investors for about a billion USD, the Flipkart-owned company has received Rs 405 crore from its Singapore-based holding entity. This is the third fund infusion for the company in 2019 from parent entity PhonePe Pvt Ltd, formerly known as Flipkart Payments. It had raised Rs 743 crore in March and Rs 698 crore in July.

According to RoC filings by PhonePe with Ministry of Corporate Affairs, the company’s board passed a resolution on September 27 to issue and allot 1,174,041 equity shares to PhonePe Pvt Ltd Singapore on the right basis. It has priced each share at Rs 3,450.

PhonePe’s Indian entity received the money as per a post-money market cap valuation of Rs 11,169 crore or $1.57 billion. The fresh capital is likely to be deployed towards fueling growth, marketing and promotion. It’s worth noting that Flipkart’s board gave a go-ahead nod to hive-off PhonePe from Flipkart so that it can raise funds independently.

PhonePe has been in talks with Tencent and Tiger Global for $1 billion round at a valuation of about $8 billion. According to Entrackr sources, the transaction hasn’t materialised yet because of the valuation. Tencent doesn’t want to offer valuation of over $6 billion.

Importantly, PhonePe’s board hasn’t approved valuation for a solo fundraise by the Bengaluru-based firm. Bloomberg had recently revealed that PhonePe might be valued in the range of $10 billion. Meanwhile, Morgan Stanley had valued PhonePe at about $7 billion.

In August, PhonePe had outnumbered Google Pay to become numero uno app in the UPI ecosystem. It had clocked over 343 million UPI transactions in August and expected to have crossed the previous record in September. The firm got approval from NPCI to add another banking partner ICICI for its Unified Payments Service (UPI) model. 

PhonePe’s rival Paytm is reportedly closing from existing backers – SoftBank and Alibaba along with US-based T Rowe Price. Interestingly, the Vijay Shekhar Sharma-led company had pulled back from UPI play on the pretext of the plateauing user base. Although PhonePe and Google Pay are leading the pack in UPI, it’s going to change in a big way after WhatsApp Pay launch.

WhatsApp has over 400 million users in India. The firm will have its payment solution ready by December 2019.