General Atlantic invests an additional $100 million in PhonePe

Image credit: Dhiraj Singh/Bloomberg/Getty Images

General Atlantic has injected an additional $100 million into PhonePe, three months after leading a $350 million investment in the Indian fintech startup that has so far raised $750 million as part of its ongoing funding round.

Walmart-backed PhonePe disclosed the investment in a filing with the local regulator on Wednesday. A spokesperson for the company confirmed the investment. The ongoing round values ​​the Bengaluru-headquartered startup at $12 billion.

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, 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.”

The investment comes at a time when PhonePe is aggressively expanding its product offering. Earlier this month, the startup launched a hyperlocal commerce app, called Pincode, 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.” The startup is also increasingly trying to cross-sell its 450 million registered user base products such as insurance and wants to expand into wealth management, lending, stock broking, ONDC-based shopping and account aggregation business.

A concern for PhonePe’s growth was the National Payments Corporation of India, which oversees the UPI network, enforcing a check on the market share of each participating player. However, NPCI has extended the deadline to 2025, paving the way for two more years of rapid growth for PhonePe. In addition, the Reserve Bank of India, the country’s central bank, has abandoned plans for a high-profile project intended to compete with UPI.