PhonePe in talks with Flipkart co-founder Binny Bansal for $100M-150M investment: Report

• ByStartup Story Team     |    March 10, 2023

As part of an ongoing funding round, digital payments and financial services startup PhonePe is reportedly in discussions with Binny Bansal, co-founder of Flipkart, to invest between $100 million to $150 million.

Back in 2018, Sachin Bansal, co-founder of Flipkart, had invested Rs 740 crore (equivalent to $100 million) in ride-hailing firm Ola. 

According to reports, discussions between PhonePe and Binny Bansal regarding investment are at an advanced stage, and the final investment amount is still under negotiation. The deal is expected to be finalised soon.

As PhonePe worked on creating a new ownership structure, existing shareholders of Flipkart, including Bansal, Tiger Global, Qatar Investment Authority, Tencent of China, and Microsoft, were anticipated to purchase a share in the digital payments firm. 

Although Walmart remains the primary investor in PhonePe, owning approximately 70% of the company.

PhonePe secured $100 million in fresh funding in the previous month from Ribbit Capital, Tiger Global, and TVS Capital Funds, valuing the company at $12 billion before the investment. The funding will aid in the expansion of its payments and insurance operations in India, as well as the introduction and growth of new ventures, including lending, stockbroking, ONDC-based shopping, and account aggregation, over the following years.

PhonePe is a participant in the UPI network, competing against other digital payment providers like Amazon Pay, Google Pay, Paytm, and WhatsApp Pay. 

Sameer Nigam, Rahul Chari, and Burzin Engineer, former executives of Flipkart, established PhonePe in 2015, and the company asserts that it has amassed over 400 million registered users.

In the financial year 2021-22, PhonePe recorded a net loss of Rs 2,014 crore, which increased from Rs 1,729 crore in the previous year, although revenue from operations soared to Rs 1,646 crore. The firm’s expenses also surged to Rs 3,705.6 crore. On a unit basis, PhonePe incurred a cost of Rs 2.25 to generate one rupee in revenue during FY22.

PhonePe aims to achieve profitability in its core operations during the financial year 2022-23. 

Even though PhonePe has a valuation of $12 billion, its listed competitor Paytm is currently traded at a market capitalization of $4.24 billion. Paytm, established by Vijay Shekhar Sharma, recorded a net loss of Rs 2,325 crore in FY22, although its revenue rose to Rs 3,892.40 crore, exceeding PhonePe’s revenue.

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