Walmart-owned digital payments leader PhonePe has started its initial preparations for an IPO in India. This move marks a significant milestone for the fintech giant, which is the country’s largest UPI payments platform. The Bengaluru-based company is looking to go public, joining the growing list of Indian tech unicorns making stock market debuts.
Doug McMillon, CEO of Walmart, confirmed the development, stating, “Our PhonePe team has long aspired to be a public company, and we are excited to be taking these early steps towards an IPO in India.”
Why is PhonePe Going Public?
PhonePe has been preparing for this move for some time. In December 2022, the company shifted its headquarters from Singapore to India. Since then, it has restructured its business, creating separate subsidiaries for different services beyond digital payments. This strategic change has made it easier for PhonePe to launch its IPO in India.
The decision to go public is backed by strong financial growth. In the financial year 2024 (FY24), PhonePe recorded a 73% rise in revenue, reaching Rs 5,064 crore. It also reported a profit of Rs 197 crore, a significant improvement from its Rs 738 crore loss in the previous year.
PhonePe Market Position and Challenges
PhonePe is currently India’s biggest UPI payments platform, holding 48% of the market. Its closest competitor, Google Pay, has 37% of the UPI market share.
However, PhonePe faces a major regulatory challenge. The National Payments Corporation of India (NPCI) is working on enforcing a 30% market share cap for third-party UPI apps. This means that no single company will be allowed to control more than 30% of UPI transactions. The deadline for compliance has already been extended twice, with the current date set as December 31, 2024.
PhonePe’s CEO and co-founder, Sameer Nigam, had previously expressed concerns about the regulation. He stated, “The UPI market cap limit is a big issue for us. We feel uncertain about an IPO when a 30% cap could be enforced at any time.”
While some experts believe the market cap rule may not be implemented, the timing of PhonePe’s IPO could depend on how this situation unfolds.
What’s Next for PhonePe?
With an estimated valuation of USD 12 billion, PhonePe’s IPO is expected to attract strong interest from investors. The company’s profitability and leadership in the digital payments space make it a promising candidate for a successful stock market debut.
As PhonePe continues its preparations for an IPO, its financial performance and regulatory developments will be closely monitored. Investors are eager to see how the company navigates regulatory challenges while sustaining its rapid growth in India’s booming fintech sector.
