Flipkart injects $100m in PhonePe as battle in payments space intensifies

PhonePe co-founder Sameer Nigam. Photo: Mint

In a bid to battle the rising competition in the digital payments space, PhonePe has raised about Rs 698 crore ($100 million) in fresh infusion from its parent company Flipkart, per company filings with the Registrar of Companies (RoC) sourced by paper.vc.

“…the consent of the board of directors of the company be and is hereby accorded to allot 2,022,946 equity shares of Rs 10 only each at a securities premium of Rs 3,440 per share aggregating to Rs 6,97,91,63,700 only new equity shares to PhonePe Pvt Ltd, Singapore (formerly Flipkart Payments Pvt Ltd),” the filings said.

The resolution for allotment of the said shares was passed at a board meeting on July 5.

The funding is part of the $500-million capital commitment made by Flipkart for its payments business in 2017. PhonePe had raised over Rs 700 crore from its Singapore-registered parent entity in March this year.

PhonePe was founded in 2015 by former Flipkart executives Sameer Nigam, Rahul Chari, and Burzin Engineer. It was, however, acquired by Flipkart within a year. The company clocked around 230 million UPI transactions on its platform, said The Economic Times report quoting sources.

According to a recent Mint report, PhonePe’s volume and value of transactions have almost quadrupled over the past year. Hence, Flipkart’s board is looking to spin off PhonePe into a separate entity and is exploring to raise $1 billion from outside investors at a valuation of as much as $10 billion.

Walmart-owned Flipkart would, however, remain a shareholder.

PhonePe was also reportedly in talks with private equity firms KKR & Co. and General Atlantic LLC for funding earlier this year. At $10-billion valuation, however, PhonePe would still trail arch-rival Paytm, which is valued at about $16-18 billion.

The digital payments market in India has been booming with companies such as Paytm, PhonePe and Google Pay leading the charge. Digital payments in India are expected to exceed cash transactions by 2022, according to an IDC Financial Insights report.