PhonePe moves closer to its IPO after SEBI approval, filing its UDRHP. The offer for sale will be led by Walmart. The fintech giant, with a 48% UPI market share, has shown strong revenue growth and improved its financial performance.
Following the recent approval from the Securities and Exchange Board of India (SEBI), PhonePe has submitted its Updated Draft Red Herring Prospectus (UDRHP), moving closer to its highly anticipated public listing. The company, which initially filed confidential IPO papers in September 2024, is now expected to debut on the markets soon. As per the UDRHP, the public offering will be an offer for sale, led by majority shareholder Walmart alongside other prominent investors such as Tiger Global and Microsoft.
PhonePe dominates India's UPI landscape with more than 48% market share by value, processing 9.8 billion transactions in December alone, according to recent data from the NPCI. The company has posted rapidly growing revenues with diversified revenue streams in recent years while steadily improving its financial performance. Beyond its core payments business, PhonePe has successfully diversified into lending and insurance distribution verticals that have scaled to represent 10% of its total revenue in just three years. This strategic expansion has been a key driver of the company's revenue growth and its increasingly maturing financial profile.
From payments pioneer to full-stack fintech platform
Launched in 2016, PhonePe was India's first UPI-based payments app from a non-bank fintech company. The company has evolved from a payments application into a diversified technology firm and operates across consumer and merchant payment businesses, where it leads across both the axis. Over the years, PhonePe has scaled into a full-stack financial services platform--offering insurance and lending distribution--and has ventured into mutual funds and stock broking through its Share.Market platform. This diversification strategy is further evidenced by its entry into the software infrastructure space with Indus Appstore, India's homegrown Android app marketplace.
Diversified revenue growth with improved bottomline
With consistent year-on-year revenue gains, PhonePe is one of the few consumer internet companies that has shown diversified growth. Based on the DRHP filed by the company, PhonePe recorded INR 7,115 Cr in revenue, reflecting a strong 40% year-on-year growth. This was accompanied by the company turning free cash flow positive with cash flow from operations amounting to INR 1,202 Cr. PhonePe continued to improve its bottom line, with Adjusted EBITDA (excluding ESOP costs) more than doubling to INR 1,477 Cr (from INR 652 Cr in the prior year), and Adjusted PAT (excluding ESOP costs) more than tripling to INR 630 Cr (from INR 197 Cr in the prior year). The company also recorded positive Adjusted EBIT (excluding ESOP costs) for the first time at INR 117 Cr. The improved profitability signals enhanced operational discipline and a maturing cost structure.
Blue-Chip investor base and recent funding
PhonePe boasts a marquee investor roster with Walmart holding a majority stake. Other prominent backers include General Atlantic, Ribbit Capital, TVS Capital, Tiger Global, Microsoft, and Qatar Investment Authority. Following SEBI's approval, companies typically list in a 90-days window, and PhonePe is anticipated to list within the next few months.
Who are the entities selling stake in the IPO
Walmart, PhonePe's largest shareholder, will be offloading 9% of its stake as part of the IPO, while Tiger Global will sell 0.2% and Microsoft 0.7%. Interestingly, General Atlantic previously invested $600 million in PhonePe in a secondary round in September 2025, effectively doubling down on its initial $500 million investment. This brings General Atlantic's total investment in PhonePe to approximately $1.15 billion across multiple rounds, increasing its stake to 8.9%. During this transaction, the founders and employees exercised all their vested options and sold 40% of their vested ESOPs solely to cover the tax liabilities arising from the ESOPs. Neither the employees nor the founders received any liquidity from the transaction. Sources indicate that Walmart is selling only the minimum stake required to meet SEBI's public listing requirements. This demonstrates strong confidence in the business from both the founders and investors, with the majority of investors choosing to remain invested in the company. (ANI)
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