KKR, General Atlantic may invest in Flipkart’s payments arm PhonePe

PhonePe

Private equity (PE) firms KKR & Co. and General Atlantic LLC have expressed interest in investing in Flipkart’s digital payments arm, PhonePe Pvt. Ltd, two people familiar with the matter said.

Some existing investors of Walmart Inc.-owned Flipkart, such as Tiger Global and Tencent, are also likely to invest in PhonePe, the people said, requesting anonymity.

They said that Walmart is yet to finalize a plan to spin off PhonePe and may still decide against it. Also, Walmart will retain a majority stake in PhonePe even if it is spun off as an independent unit, they added.

“KKR is exploring a potential investment in PhonePe,” said one of the people cited above. “This is part of the PE firm’s strategy to add more tech-focused investments in its India portfolio.”

The interest from the PE firms comes at a time when PhonePe is looking at a valuation of $10 billion, one of the people cited above said. The figure is a sharp rise from the $1.5 billion that PhonePe was valued at when Walmart bought a 77% stake in the Bengaluru-based online retailer for $16 billion last year.

A surge in India’s digital payments business and a funding boom in the start-up ecosystem could be key factors driving the high valuations, but it is unclear whether PhonePe would be able to attract investors at such lofty levels.

PhonePe is looking to raise fresh funds independently to cash in on the growth in digital payments by extracting a high valuation and form a consortium of investors who can offer big doses of fresh funds it needs to win the payments war over the next few years.

Even if PhonePe achieves the $10 billion valuation mark, it would still trail arch-rival Paytm.

Paytm is valued by investors at $16 billion after Warren Buffett’s Berkshire Hathaway invested $300 million in the Noida-based company last year.

A PhonePe spokesperson said, “These are just rumors. As a company policy, we don’t speculate on rumors.”

General Atlantic and Tiger Global declined to comment while KKR said it does not comment on market speculation.

Tencent did not respond to queries till the time of going to press.

Walmart has been considering a plan to spin off PhonePe since last year, Mint reported on 1 October.

Founded by three former Flipkart executives Sameer Nigam, Rahul Chari and Burzin Engineer, the payments business has emerged as an integral part of Flipkart’s overall strategy.

The platform was also an essential part of Walmart’s reason to invest in the Flipkart group last year.

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.

PhonePe announced in December that the mobile payments app had crossed a billion transactions. The app provides peer-to-peer transfer, recharges, bill payments, gold purchases, among others.

PhonePe last received an infusion of $175 million in October from Walmart, as part of the $500 million commitment made by Flipkart to expand PhonePe. The commitment was in addition to the $75 million infused by Flipkart in the mobile payments business since it acquired PhonePe in April 2016.

Apart from leveraging the UPI (unified payments interface) platform, PhonePe has been slowly entering the offline space as it competes with Paytm. PhonePe claims to have over 1 million offline merchants on its platform. Apart from providing a point-of-sale device for offline vendors, the company is diversifying its offline offerings based on the requirements of the merchant.

Also read:

India: Flipkart, payments arm PhonePe in talks to raise fresh capital

India: Flipkart injects $66m in payments arm PhonePe to take on rival Paytm

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.