PhonePe has raised another $200 million as part of an ongoing round, a deliberation that has now helped it pull $650 million in recent weeks despite the market slump, as the Indian fintech giant bulks up its war chest following the recent separation from the parent firm Flipkart.

Walmart, which owns the majority of PhonePe, has invested $200 million into the startup. The ongoing round values the Bengaluru-headquartered PhonePe at a pre-money valuation of $12 billion. PhonePe has previously said that it plans to raise up to $1 billion as part of the ongoing financing round.

“We are excited about PhonePe’s future and have confidence in how it continues to expand its offerings and provide access to financial services for Indians at scale. India is one of the world’s most digital, dynamic and fastest growing economies, and we are pleased to have the opportunity to continue to support PhonePe,” said Judith McKenna, President and CEO for Walmart International, in a statement.

At a $12 billion valuation, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm. Paytm, which expects to reach $1 billion revenue by March this year, is currently valued at under $5 billion.

PhonePe, to be sure, is the clear leader in the mobile payments market on UPI, a network built by a coalition of retail banks in India. UPI has become the most popular way Indians transact online, and processes more than 8 billion transactions a month.

Seven-year-old PhonePe commands about 50% of all these transactions. PhonePe said last week that it was on pace to processing, on an annualized basis, transactions worth $1 trillion. Walmart, which also owns majority of e-commerce giant Flipkart, said last month that the separation of Flipkart and PhonePe was “very analogous to eBay and PayPal, where each of them operating independently can pursue their own initiatives.”

A concern for PhonePe’s growth was the Indian regulator enforcing a check on the market cap on each participating player, but its recent extension to the deadline until 2025 has paved the way for the startup for another two years of fast growth. (Google’s GPay and PhonePe currently process more than 80% of all UPI transactions.)

PhonePe is also slowly becoming a distribution engine, leveraging the large 300 million user base to cross-sell products such as insurance. The startup said it plans to deploy the funds to also build and scale wealth management, lending, stockbroking, ONDC-based shopping and account aggregators businesses.

Industry experts reckon that PhonePe’s end game might be to become a bank, which they say justifies the lofty valuation. PhonePe clocked a revenue of $234.3 million in the first nine months of 2022.

The firm projects a revenue of $325 million for the calendar year 2022 and $504 million for 2023, according to a valuation report prepared by the auditing firm KPMG and filed by PhonePe in January.

The startup doesn’t expect to turn EBIDTA positive, a key profitability metric, until calendar year 2025, KMPG wrote in its valuation report. PhonePe’s financials and metrics from the valuation report have not been previously reported.

“We would like to thank Walmart, our majority investor, for their continued support of our long-term aspirations. We are excited about the next phase of our growth as we build new offerings for Indian consumers and merchants, along with enabling financial inclusion across the nation,” said Sameer Nigam, co-founder and chief executive of PhonePe, in a statement.


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