PhonePe CEO says UPI mcap overhang holding back company from going public

Speaking at the Global Fintech Fest, Sameer Nigam, chief executive officer, PhonePe, said, "As far as going public, the market cap overhang is definitely a problem for us

The overhang of the proposed market share cap by the National Payments Corporation of India (NPCI) on the volume of UPI transactions a third-party application provider (TPAP) can process is holding PhonePe from going public.

Speaking at the Global Fintech Fest, PhonePe CEO Sameer Nigam said: “As far as going public, the market cap overhang is definitely a problem for us. I feel nervous going to the market and asking investors if there is a 30 per cent market cap lurking”.

“I don’t want to go public based on today’s number and market share until I can look you in the eye and say buy my shares as this company will be able to grow from here. Beyond that, the preparedness for the IPO, and disclosure of quarterly numbers,” Nigam added.

In November 2020, NPCI came up with a directive capping the share of transactions a TPAP could process at 30 per cent of the volume of transactions handled on UPI, which is to be calculated on the basis of the volume of transactions processed during the preceding three months (on a rolling basis).

The deadline to adhere to the cap has been extended multiple times and the latest deadline set by NPCI is December 2024.

The market share cap is aimed at curbing the dominance of large players who have cornered over 80 per cent of the UPI market share among TPAPs.

According to latest data, the top three players on UPI processed 93 per cent of all such transactions in July. 

PhonePe continued its streak as the largest player in the UPI ecosystem with a market share of 48.38 per cent. Google Pay ranked second in UPI transaction volumes the same month, with the company cornering about 37 per cent of the market share. The two largest players process about 85 per cent of UPI volumes in the country.

Nigam highlighted the need for NPCI to introduce a volume cap is prompted by concerns of business continuity plans.

“Business continuity plans are an issue. If UPI is ubiquitous, we have to ensure that PhonePe never goes down. So, we spent the last couple of years building more data centres. We are trying to ensure that we do everything on our part to satisfy NPCI and the regulator,” Nigam said.

“Scale brings with it different responsibilities, and we are not shying away from that. If the cap goes, we will run out of excuses of not going public,” he added.