PhonePe files updated IPO papers, Microsoft, Tiger Global to exit
In a significant development, digital payments firm PhonePe has filed its updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The issue will be entirely an offer for sale of 5.06 crore equity shares by existing shareholders, according to the updated DRHP.
The filing of the updated DRHP is a crucial step towards the company’s highly anticipated IPO, which is expected to be one of the largest in the Indian startup ecosystem. PhonePe’s parent company, Walmart-owned Flipkart, had initially filed the DRHP in July 2022, but the company had to refile the papers due to changes in its shareholder structure and other developments.
As per the updated DRHP, Walmart, the largest shareholder in PhonePe, will reduce its stake in the payments firm by around 9%. This move is seen as a strategic decision by Walmart to unlock value from its investment in PhonePe, which has grown significantly since its acquisition in 2016. Walmart had acquired a majority stake in Flipkart, PhonePe’s parent company, for $16 billion in 2018.
However, the updated DRHP also reveals that smaller shareholders Microsoft and Tiger Global will fully exit their stakes in PhonePe through the IPO. Both Microsoft and Tiger Global had invested in PhonePe in 2020, as part of a funding round that valued the company at $5.5 billion. The exit of these investors is seen as a positive development for PhonePe, as it will help the company to simplify its shareholder structure and reduce the number of stakeholders.
The IPO is expected to be a significant event in the Indian startup ecosystem, as it will provide a liquidity event for PhonePe’s shareholders and employees. The company has grown rapidly since its inception in 2015, and has become one of the leading digital payments platforms in India. PhonePe’s user base has grown to over 300 million, and the company has expanded its services to include a range of financial products, including insurance, mutual funds, and credit.
The updated DRHP also provides insight into PhonePe’s financial performance, which has shown significant improvement in recent years. The company’s revenue has grown at a compound annual growth rate (CAGR) of 100% over the past three years, driven by the increasing adoption of digital payments in India. PhonePe’s net loss has also reduced significantly, as the company has focused on improving its operational efficiency and reducing its costs.
The IPO is expected to be a major milestone for PhonePe, as it will provide the company with the necessary capital to further expand its services and invest in new technologies. The company has stated that it will use the proceeds from the IPO to strengthen its balance sheet, invest in new business initiatives, and provide liquidity to its shareholders.
In conclusion, the filing of the updated DRHP by PhonePe is a significant development in the Indian startup ecosystem. The IPO is expected to be a major event, and will provide a liquidity event for PhonePe’s shareholders and employees. The exit of Microsoft and Tiger Global, and the reduction of Walmart’s stake, are seen as positive developments for the company, as they will help to simplify its shareholder structure and reduce the number of stakeholders.
As the Indian digital payments market continues to grow, PhonePe is well-positioned to capitalize on this trend. The company’s focus on innovation, customer experience, and operational efficiency has enabled it to establish itself as a leader in the market. With the IPO, PhonePe is expected to further accelerate its growth, and become one of the leading financial technology companies in India.
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