General Atlantic has put another $100 million into PhonePe, four months after a $350 million investment in the Indian fintech startup that has so far raised $850 million in an ongoing round of funding at the height of the slowing global economy.
Walmart-backed PhonePe announced the investment in a statement Monday. The ongoing round values the Bengaluru-headquartered startup at $12 billion. PhonePe plans to raise another $150 million in the ongoing round. General Atlantic invested another $100 million in PhonePe last month.
With a valuation of $12 billion, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm, the latter of which is currently valued at nearly $5 billion.
PhonePe, which spun off completely from e-commerce giant Flipkart last year, dominates transactions on UPI, a network built by a coalition of retail banks in India. UPI is the most popular way Indians transact online — processing more than 8 billion transactions per month. Google’s GPay and PhonePe currently handle over 80% of all UPI transactions.
The seven-year-old PhonePe controls about 50% of all these transactions by value, and it’s not slowing down. The company said earlier this year that it was well on track to process transactions worth $1 trillion annually.
Walmart, which also owns a majority stake in e-commerce giant Flipkart, said earlier this year that the separation of Flipkart and PhonePe was “very analogous to eBay and PayPal, where each of them can pursue their own initiatives independently.”
General Atlantic, which has supported a number of Indian companies over the past decade, including Jio, BillDesk, Byju’s, Amagi, NoBroker and Unacademy, plans to invest at least $2 billion to $3 billion in India over the next five to seven years. according to people familiar with the plans of the New York-headquartered growth stock investor.
The new investment comes as PhonePe is aggressively expanding its product offerings. The startup launched a hyper-local commerce app called Pincode earlier this year, which is powered by the Open Network for Digital Commerce (ONDC), an Indian government initiative that aims to democratize the e-commerce landscape by offering a commission-free platform .
PhonePe said it will invest “considerable efforts” in PIN and in “enabling every Indian retailer to spread over every nook and cranny for years to come.”
PhonePe aims to capitalize on its 450 million registered user base by expanding into additional financial services, including wealth management, lending, stock brokerage, ONDC-based shopping and account aggregation.
One potential obstacle to PhonePe’s growth was the National Payments Corporation of India (NPCI), the organization overseeing the UPI network, which attempted to impose market share restrictions on participating players. However, the NPCI has extended the compliance deadline to 2025, allowing PhonePe to quickly expand for another two years.
In another favorable development, the Reserve Bank of India, the country’s central bank, has decided to abandon a high-profile project originally planned to compete with the UPI platform.
