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 filed by the company.
The IPO is expected to be one of the most highly anticipated public issues in recent times, given PhonePe’s dominant position in the digital payments space in India. The company, which is a subsidiary of Walmart-owned Flipkart, has been a pioneer in the Unified Payments Interface (UPI) space and has been consistently gaining market share over the past few years.
As per the updated DRHP, Walmart, which is the largest shareholder in PhonePe, will reduce its stake in the payments firm by around 9% through the IPO. This will be a significant development, as Walmart has been a key backer of PhonePe since its acquisition of Flipkart in 2018. The reduction in stake by Walmart will likely be seen as a positive move, as it will allow other investors to participate in the company’s growth story.
However, the bigger news is that smaller shareholders Microsoft and Tiger Global will fully exit their stakes in PhonePe through the IPO. Both Microsoft and Tiger Global have been early investors in PhonePe and have been instrumental in the company’s growth over the years. The exit of these investors will likely be seen as a strategic move, as they look to monetize their investments in the company.
The IPO will be a significant milestone for PhonePe, which has been looking to list on the public markets for some time now. The company had initially filed its DRHP with SEBI in July last year, but had to refile the papers after the regulator raised some concerns. The updated DRHP addresses these concerns and provides more clarity on the company’s financials and growth plans.
PhonePe’s decision to go public is also a reflection of the growing demand for digital payments in India. The UPI space has seen explosive growth over the past few years, driven by the government’s push for digitalization and the increasing adoption of smartphones. PhonePe has been a key beneficiary of this trend, with its user base growing rapidly over the past few years.
The company’s financials have also been impressive, with revenues growing at a rapid pace. In the fiscal year 2022, PhonePe’s revenues stood at Rs 1,646 crore, up from Rs 424 crore in the previous year. The company’s losses have also been reducing, with net losses standing at Rs 1,039 crore in FY22, down from Rs 1,297 crore in the previous year.
The IPO will be a significant test for PhonePe, as it looks to convince investors to buy into its growth story. The company will need to demonstrate its ability to sustain its growth momentum and improve its financials over the next few years. However, given its dominant position in the digital payments space and its strong financials, PhonePe is well-placed to attract investor interest.
In conclusion, PhonePe’s decision to file its updated DRHP with SEBI is a significant development, as it paves the way for the company’s IPO. The issue will be entirely an offer for sale of 5.06 crore equity shares by existing shareholders, with Walmart reducing its stake by around 9% and Microsoft and Tiger Global exiting their stakes fully. The IPO will be a significant milestone for PhonePe, as it looks to list on the public markets and raise funds to drive its growth plans.
As the digital payments space continues to grow in India, PhonePe is well-placed to benefit from this trend. The company’s strong financials, dominant market position, and experienced management team make it an attractive investment opportunity for investors. With the IPO expected to be one of the most highly anticipated public issues in recent times, PhonePe is likely to generate significant interest among investors.
The development is also a reflection of the growing maturity of the Indian startup ecosystem, which has seen several high-profile IPOs in recent times. The success of PhonePe’s IPO will be closely watched by other startups, which are looking to list on the public markets and raise funds to drive their growth plans.
Overall, PhonePe’s decision to file its updated DRHP with SEBI is a significant development, as it paves the way for the company’s IPO. With its strong financials, dominant market position, and experienced management team, PhonePe is well-placed to attract investor interest and drive its growth plans over the next few years.
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