PhonePe, which last week received capital infusion of $1 Bn from its parent company, is in talks to raise another $1 Bn through external funding. Economic Times (ET) report claims that group of high profile investors including DST Global, Ribbit Capital, Falcon Edge and Green Oak have held investments talks spanning across several weeks and months with PhonePe.
The success of these talks hinges on agreement on market valuation, with PhonePe seeking market valuation of anywhere between $8 bn – 12 bn. The Bengaluru based startup is looking to dilute nearly 10% stake with this fundraising, ET claimed after citing unidentified sources.
Reports further claim that Tiger Global and Tencent, which were among Flipkart’s prominent investors before Walmart’s takeover, are also engaged in the negotiation. If sources are to be believed then Flipkart’s early backers including DST Global are most likely to be part of PhonePe’s external fundraising round.
PhonePe is currently riding high on digital payment revolution as it looks to clock nearly $5 Bn transaction by the end of 2019. Its latest transaction value stands at almost 335 Mn. The company is locked in a cut-throat competition with deep pocketed players like Paytm and Google Pay.
Walmart owned Flipkart is betting big on PhonePe as smartphone and internet penetration opens the golden era of digital payment in India. One of the important decisions made immediately after Walmart’s takeover of Flipkart was making PhonePe into a separate entity, which seems to have helped the latter in competing with its deep-pocketed competitors.
But whether PhonePe eventually becomes a golden goose for Flipkart will be determined by various factors, the most important being on how well it copes with the competition. Meanwhile, the competition in digital payment will only heat up further with the entry of Whatsapp in the payment space.