As detailed in the announcement, PhonePe is set to use the funds to carry out investments into infrastructure, which also includes the development of data centres. Furthermore, the company aims to invest in new businesses in markets of the likes of insurance, wealth management, and lending, and also plans to focus on UPI lite and credit on UPI.
The news of the investment follows the October 2022 reporting from Moneycontrol, where the publication stated that PhonePe has been ‘eyeing’ a funding from General Atlantic at USD 12 billion valuation, and PhonePe’s separation from ecommerce startup Flipkart, announced in December 2022, which completed its transition to being an India-based company.
With this funding, PhonePe has become a decacorn (a startup valued at over USD 10 billion), joining the ranks of Flipkart, acquired by Walmart, Paytm, Byju’s, and Swiggy. Furthermore, as detailed by Moneycontrol, PhonePe’s valuation has exceeded that of digital payments and neobanking firm Razorpay, which was last valued at approximately USD 7.5 billion.
Additionally, Moneycontrol assessed that PhonePe’s fundraise comes at a time when the company’s closest competitor, Paytm, saw its valuation decrease by more than 60% since it had gone public in November 2021, which prompted public shareholders to question its ability to attain company-level profitability. Despite this, Paytm’s revenue is higher than that of PhonePe, with the company having reported as of FY 2022 a revenue of Rs 3,892.40 crore, as opposed to PhonePe, which had a revenue of Rs 1,646 crore.
What is more, PhonePe’s fundraising comes at a time where India-based fintech companies face challenges, as the Reserve Bank of India (RBI) has been coming down heavily on the sector and companies that violate regulations. Moreover, valuations of financial services and technology companies have significantly dropped throughout 2022 due to a broader correction in global financial markets caused by macroeconomic uncertainties.
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