New Delhi: Walmart-owned fintech major PhonePe has taken its first step toward one of India’s biggest IPOs in recent times by filing draft papers with market regulator SEBI via the confidential pre-filing route. According to multiple industry sources, the company is eyeing a pure offer-for-sale (OFS) worth around ₹12,000 crore ($1.35 billion), with existing shareholders Walmart, Tiger Global, and Microsoft expected to dilute a combined 10 percent stake.
High-profile shareholder participation
While Walmart continues to hold a majority stake in PhonePe, other major investors include Tiger Global, Microsoft, General Atlantic, Ribbit Capital, TVS Capital, Tencent, and Qatar Investment Authority. Walmart, Tiger Global, and Microsoft are said to be participating in the proposed OFS, though responses from Tiger Global and Microsoft were awaited at the time of reporting.
PhonePe confirmed the confidential filing in a statement, clarifying that submitting the Pre-filed Draft Red Herring Prospectus (PDRHP) does not necessarily guarantee that the IPO will be launched.
Advisors and valuation targets
Earlier this year, PhonePe appointed Kotak Mahindra Capital, Citi, Morgan Stanley, and JP Morgan as lead advisors for the planned IPO. According to reports, the company is targeting a listing valuation of up to $15 billion (₹1.33 lakh crore). Other investment banks, including Jefferies, Goldman Sachs, Axis Capital, and JM Financial, have also joined the deal. Legal advisors include Shardul Amarchand Mangaldas, Cyril Amarchand Mangaldas, and Trilegal.
The confidential filing route, introduced by SEBI in 2022, allows companies to keep sensitive data away from rivals and withdraw filings if market conditions turn unfavourable.
Strong financial performance
PhonePe’s financials appear robust heading into the IPO. In FY25, the company recorded revenue of ₹7,115 crore, marking a 40 percent year-on-year growth. It also turned free cash flow positive, generating ₹1,202 crore from operations.
Adjusted EBITDA (excluding ESOP costs) more than doubled to ₹1,477 crore, while adjusted profit after tax surged by 220 percent to ₹630 crore. For the first time, the company also posted a positive adjusted EBIT of ₹117 crore.
Expanding beyond payments
Founded in 2016, PhonePe is India’s leading digital payments player alongside Google Pay. The company has steadily expanded into insurance, lending, stockbroking, and wealth management, while also branching into consumer tech with its Pincode and Indus Appstore platforms.
By March 2024, PhonePe had 53 crore registered users, around 20 crore monthly active customers, and over 50 lakh payment devices deployed. It processed 770 crore transactions monthly, worth ₹10.5 lakh crore in total payment value.
In addition to domestic growth, PhonePe has expanded globally through UPI partnerships in Singapore, UAE, Nepal, Sri Lanka, Bhutan, and Mauritius, enabling Indian travellers to make seamless payments abroad.
Market dynamics
PhonePe’s IPO comes at a time when its listed rival Paytm’s parent company, One97 Communications, has seen its share price rise 73 percent in the past year. Analysts believe PhonePe’s strong financial trajectory, coupled with its leadership in the UPI market, could attract significant investor interest.
Conclusion
While the confidential filing provides PhonePe with flexibility, the final decision to launch the IPO will depend on market conditions and investor sentiment. If successful, the listing could reshape India’s fintech sector and mark a milestone for Walmart’s biggest digital bet in the country.