Parent company pumps in Rs 427 crore into PhonePe to take on rivals

Walmart-owned digital payments firm PhonePe has received a fresh fund infusion of Rs 427 crore from its Singapore-based holding company. PhonePe has allotted 1,007,670 equity shares of Rs 10 each at securities premium of Rs 4,230 per share to the holding firm, according to the regulatory documents filed by PhonePe, which were sourced from business signals platform Paper.vc. 

The funding is expected to help the company to take on rivals such as Alibaba-backed Paytm, Google Pay and Amazon Pay.

“PhonePe has received the lion’s share of its funding since Walmart’s acquisition of Flipkart in 2018. During 2018 and 2019, PhonePe received over $700 million in funding as the ever-expanding digital payments space heats up in India,” said Nikhil Kanekal, analyst at Paper.vc.

The Bengaluru-based firm is investing about Rs 800 crore this calendar year on marketing activities and take on the competition. A big chunk of it will go on television ads. An equally big portion of it will be spent on the ground across 300 cities, where it has over 9.5 million offline merchants, and also towards conducting events, branding and enhancing the visibility in smaller towns. 

“We are going to focus on digital marketing in a significant way this year, considering the massive consumption of content online. We believe it will be a good way to target the next 100-200 million customers,” said Sameer Nigam, founder and CEO, PhonePe.

According to Walmart International CEO Judith McKenna, PhonePe’s ambition is to be India’s largest transaction platform anchored in payments. The firm, which has 200 million registered users and 20 million daily active users, witnesses 500 million monthly transactions. The company also witnessed annualised total payments value (TPV) of $180 billion and has 10 million merchants.

“This business is just three years old. It took the business (PhonePe) two years to reach the one billion transaction mark. Last year, it crossed 5 billion transactions. We are really excited about its future,” said McKenna at the 2020 Investment Community Meeting held in New York this month.

In an attempt to diversify, PhonePe has started going deeper into the Indian financial services market, the size of which could potentially touch around $340 billion in the next few years. Early this year, the firm had launched a new savings product “Liquid Fund” on its app. It has also forayed into the insurance segment.