KKR, Gen­eral At­lantic may in­vest in Phonepe

PE firms Tiger Global, Ten­cent are also likely to in­vest in Phonepe

Hindustan Times (Bathinda) - - Ht Business - Var­sha Bansal var­[email protected]

BENGALURU: Pri­vate eq­uity (PE) firms KKR & Co. and Gen­eral At­lantic LLC have ex­pressed in­ter­est in in­vest­ing in Flip­kart’s dig­i­tal pay­ments arm, Phonepe Pvt. Ltd, two peo­ple fa­mil­iar with the mat­ter said.

Some ex­ist­ing in­vestors of Wal­mart Inc.-owned Flip­kart such as Tiger Global and Ten­cent are also likely to in­vest in Phonepe, the peo­ple said, re­quest­ing anonymity.

They said that Wal­mart is yet to fi­nal­ize a plan to spin off Phonepe and may still de­cide against it. Also, Wal­mart will re­tain a ma­jor­ity stake in Phonepe even if it is spun off as an in­de­pen­dent unit, they added.

“KKR is ex­plor­ing a po­ten­tial in­vest­ment in Phonepe,” said one of the peo­ple cited above. “This is part of the PE firm’s strat­egy to add more tech-fo­cused in­vest­ments in its In­dia port­fo­lio.”

The in­ter­est from the PE firms comes at a time when Phonepe is look­ing at a val­u­a­tion of $10 bil­lion, one of the peo­ple cited above said. The fig­ure is a sharp rise from the $1.5 bil­lion that Phonepe was val­ued at when Wal­mart bought a 77% stake in the Bengaluru-based on­line re­tailer Flip­kart for $16 bil­lion last year.

A surge in In­dia’s dig­i­tal pay­ments busi­ness and a fund­ing boom in the start-up ecosys­tem could be key fac­tors driv­ing the high val­u­a­tions but it is un­clear whether Phonepe would be able to at­tract in­vestors at such lofty lev­els.

Phonepe is look­ing to raise f

resh funds in­de­pen­dently to cash in on the dig­i­tal pay­ments boom by ex­tract­ing a high val­u­a­tion and form a con­sor­tium of in­vestors who can of­fer big doses of fresh funds it needs to win the pay­ments war over the next few years.

Even if Phonepe achieves the $10 bil­lion val­u­a­tion mark, it would still trail arch-ri­val Paytm. Paytm as val­ued by in­vestors at $16 bil­lion af­ter War­ren Buf­fett’s Berk­shire Hath­away in­vested $300 mil­lion in the Noida-based com­pany last year.

A Phonepe spokesper­son said, “These are just ru­mors. As a com­pany pol­icy, we don’t spec­u­late on ru­mors.”

Gen­eral At­lantic and Tiger Global de­clined to com­ment and KKR said they do not com­ment on mar­ket spec­u­la­tion. Ten­cent did not re­spond to queries as of

press time.

Wal­mart has been con­sid­er­ing a plan to spin off Phonepe since last year, Mint re­ported on Oc­to­ber 1.

Founded by three for­mer Flip­kart ex­ec­u­tives Sameer Nigam, Rahul Chari and Burzin En­gi­neer, the pay­ments busi­ness has emerged as an in­te­gral part of Flip­kart’s over­all strat­egy. It was also an es­sen­tial part of Wal­mart’s rea­son to in­vest in the Flip­kart group last year.

The dig­i­tal pay­ments mar­ket in In­dia has been boom­ing with com­pa­nies such as Paytm, Phonepe and Google Pay lead­ing the charge. Dig­i­tal pay­ments in In­dia are ex­pected to ex­ceed cash trans­ac­tions by 2022, ac­cord­ing to an IDC Fi­nan­cial In­sights re­port.

Phonepe an­nounced in De­cem­ber that the mo­bile pay­ments app had crossed a bil­lion trans­ac­tions. The app pro­vides peer-to-peer trans­fer, recharges, bill pay­ments, gold pur­chases, among oth­ers.

Phonepe last re­ceived an in­fu­sion of $175 mil­lion in Oc­to­ber from Wal­mart, as part of the $500 mil­lion com­mit­ment made by Flip­kart to ex­pand Phonepe. The com­mit­ment was in ad­di­tion to the $75 mil­lion in­fused by Flip­kart in the mo­bile pay­ments busi­ness since it ac­quired Phonepe in April 2016.

Apart from lever­ag­ing the UPI plat­form, Phonepe has been slowly pro­lif­er­at­ing into the off­line space as it com­petes with Paytm. Phonepe claims to have over 1 mil­lion off­line mer­chants on its plat­form. The com­pany is also di­ver­si­fy­ing its off­line of­fer­ings based on the re­quire­ments of the mer­chant.

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