PhonePe extends new funding to $850 million

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General Atlantic has poured an additional $100 million into PhonePe, four months after leading a $350 million investment in the Indian fintech startup that has so far raised $850 million in an ongoing funding round at the height of the slowing global economy .

Walmart-backed PhonePe disclosed the investment in a statement on Monday. The ongoing round values ​​the Bengaluru-headquartered startup at $12 billion. PhonePe is looking to raise as much as another $150 million in its ongoing round. General Atlantic invested an additional $100 million in PhonePe last month.

With a valuation of $12 billion, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm, the latter of which is currently valued at nearly $5 billion.

PhonePe, which completed a full separation from e-commerce giant Flipkart last year, dominates transactions on UPI, a network built by a coalition of retail banks in India. UPI is the most popular way Indians shop online – it processes more than 8 billion transactions a month. Google’s GPay and PhonePe currently process more than 80% of all UPI transactions.

Seven-year-old PhonePe commands roughly 50% of all those transactions by value, and it’s not slowing down. The company said earlier this year that it was processing $1 trillion worth of transactions annually.

Walmart, which also owns a majority stake in e-commerce giant Flipkart, said earlier this year that the separation of Flipkart and PhonePe was “very analogous to eBay and PayPal, where each operating independently can pursue its own initiatives.”

General Atlantic, which has backed a number of Indian firms including Jio, BillDesk, Byju’s, Amagi, NoBroker and Unacademy over the past decade, plans to deploy at least $2 billion to $3 billion in India over the next five to seven years, according to people familiar with the matter. with the growth equity investor’s plans headquartered in New York.

The new investment comes at a time when PhonePe is aggressively expanding its product offering. Earlier this year, the startup launched a hyperlocal commerce app called Pincode, which is powered by the Open Network for Digital Commerce (ONDC), an Indian government initiative that strives to democratize the e-commerce landscape by offering a zero-commission platform.

PhonePe said it will “invest significant efforts” in Pincode and in “enabling every Indian store owner spread across every nook and cranny, over the next few years.”

PhonePe is looking to capitalize on its 450 million strong registered user base by expanding into additional financial services including wealth management, lending, stockbroking, ONDC-based shopping and account aggregation.

A potential obstacle to PhonePe’s growth was the National Payments Corporation of India (NPCI), the organization that oversees the UPI network, which sought to impose market share restrictions on participating players. However, NPCI has extended the deadline for compliance to 2025, giving PhonePe another two years of rapid expansion.

In another favorable development, the Reserve Bank of India, the country’s central bank, has decided to abandon a high-profile project originally planned to compete with the UPI platform.