PhonePe files updated IPO papers, Microsoft, Tiger Global to exit
In a significant development, PhonePe, one of India’s leading digital payments companies, 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, indicating that the company is not seeking to raise fresh capital through the IPO.
According to the updated DRHP, Walmart, the largest shareholder in PhonePe, will reduce its stake in the payments firm by around 9%. This move is expected to result in a significant reduction in Walmart’s holding in PhonePe, which currently stands at around 80%. The exact number of shares that Walmart will offload through the IPO is not disclosed in the DRHP.
In addition to Walmart, smaller shareholders Microsoft and Tiger Global will also be exiting their stakes in PhonePe through the IPO. Microsoft, which had invested in PhonePe in 2019, will be selling its entire stake in the company, while Tiger Global, which had also invested in the company around the same time, will also be exiting its investment. The exact number of shares that these investors will be selling is not disclosed in the DRHP.
The IPO is expected to provide a significant exit opportunity for these investors, who have been instrumental in supporting PhonePe’s growth and expansion over the years. The company has been a key player in India’s digital payments landscape, with a strong focus on mobile payments, online transactions, and financial services.
PhonePe’s decision to file its updated DRHP comes at a time when the Indian IPO market is witnessing a significant surge in activity. Several companies, including startups and established players, have filed their DRHPs with SEBI in recent months, seeking to raise funds through public listings.
The company’s IPO plans have been in the works for several months, with reports suggesting that PhonePe was looking to raise around Rs 10,000-15,000 crore through the issue. However, the exact size of the IPO is not disclosed in the updated DRHP.
PhonePe’s financial performance has been robust in recent years, with the company reporting significant growth in revenue and user acquisition. The company’s revenue from operations has grown from Rs 246.6 crore in FY20 to Rs 1,646.2 crore in FY22, while its user base has expanded to over 300 million.
The company’s net loss has also narrowed significantly over the years, from Rs 1,904.1 crore in FY20 to Rs 791.7 crore in FY22. The improvement in financial performance is expected to be a key factor in attracting investor interest in the IPO.
The IPO is expected to be a landmark transaction in the Indian capital markets, with several brokerages and investment banks expected to participate in the issue. The company has appointed several investment banks, including Morgan Stanley, Goldman Sachs, and Citigroup, as book-running lead managers for the IPO.
In conclusion, PhonePe’s decision to file its updated DRHP marks a significant milestone in the company’s journey towards a public listing. The IPO is expected to provide a significant exit opportunity for existing shareholders, including Walmart, Microsoft, and Tiger Global, while also providing a platform for the company to raise funds and expand its operations.
The development is also expected to have a positive impact on the Indian startup ecosystem, with several other companies expected to follow PhonePe’s lead and file their DRHPs with SEBI in the coming months.
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