Walmart-backed fintech startup PhonePe targets $9B–$10.5B IPO in India as investors question its path to monetization

Walmart-backed fintech startup PhonePe is preparing for a public debut that could rank among the largest listings in India’s fintech sector. The digital payments giant is targeting an IPO valuation between $9 billion and $10.5 billion, according to two people with direct knowledge of the discussions.

If the offering lands within that range, the listing could raise roughly $900 million to $1.05 billion. The expected valuation marks a step down from the $12 billion level PhonePe reached in private markets when it raised $100 million in 2023.

“Walmart-backed Indian fintech firm PhonePe, the country’s most used payments ​platform, is aiming to list at a valuation of between $9 billion and $10.5 billion,” Reuters reported, citing two people with direct ‌knowledge of the matter.

“That suggests the IPO will raise about $900 million to $1.05 billion. But even at the top end, the deal would mark a cut from the $12 billion valuation at which PhonePe last raised $100 million in private markets in 2023.”

India’s top payments startup PhonePe eyes $9B–$10.5B IPO as Walmart trims stake

The IPO filing shows that Walmart plans to reduce its stake by about 12% through the offering. Existing investors Tiger Global and Microsoft intend to sell their holdings as part of the transaction. The three firms together plan to offload roughly 50.7 million shares, and the company itself does not plan to issue new shares.

PhonePe competes with Google Pay and Paytm in India’s crowded digital payments sector. The company submitted its IPO paperwork in September and aims to complete the listing by April, according to one of the sources, though market conditions or geopolitical tensions, including the ongoing conflict in the Middle East, could influence the timing.

Both sources requested anonymity since the discussions remain confidential. PhonePe, Walmart, Tiger Global, and Microsoft did not immediately respond to requests for comment.

The listing would rank as India’s second-largest fintech IPO, trailing only Paytm’s blockbuster debut in 2021, which carried a valuation of roughly $20 billion at the time. Paytm now trades with a market capitalization of about $7.1 billion, a reminder of how volatile fintech valuations can be after listing.

PhonePe’s scale is hard to ignore. The company claims more than 650 million registered users and handled nearly 10 billion transactions on India’s Unified Payments Interface (UPI) in January, according to regulatory data. That figure represents nearly half of the 21.7 billion UPI transactions recorded that month.

Yet scale has not solved the industry’s biggest challenge: turning payment activity into sustainable profit.

India introduced the UPI system in 2016 and barred payment providers from charging fees for the service. The policy accelerated the shift from cash to digital transactions across the country. It left payment apps fighting for users and transaction volume in a business that offers limited margins.

PhonePe’s financial filings reflect that pressure. Losses widened to 14.44 billion rupees ($158 million) during the six months ending September 30, up from 12.03 billion rupees during the same period a year earlier. Revenue climbed about 22% to 39.18 billion rupees, according to the company’s IPO documents.

Two portfolio managers who attended pre-IPO roadshows with PhonePe’s leadership said enthusiasm around India’s fintech sector has cooled in recent months. Investors remain focused on the company’s ability to convert its vast user base into revenue streams beyond payments.

“Monetisation remains a question mark. Active users aren’t growing at the same pace, so the game is all about upsell, and that remains to be seen,” one of the portfolio managers said.

A third source, a banker working on the deal, described India’s fintech sector as crowded, with payment apps offering similar products and struggling to stand apart in a market packed with competitors.

PhonePe’s journey traces back to 2015, when Sameer Nigam, Rahul Chari, and Husna Nc Engineer founded the company in Maharashtra, India. The platform runs on the country’s UPI infrastructure and lets users transfer money instantly through a mobile app.

Nigam previously worked at Flipkart, where he served as senior vice president of engineering. Before that, he launched Mime360, a startup that connected content owners with creators.

TechStartups covered PhonePe in 2023 after Walmart invested $200 million in the company, strengthening its position as one of India’s most valuable fintech startups.

The upcoming IPO will test how public market investors view India’s massive digital payments ecosystem and whether scale alone can support a long-term business model in a market where transaction fees remain off limits.