Flipkart-owned, PhonePe, a payments company has been valued at $7 billion by Morgan Stanley. The multinational investment bank also said that PhonePe has been the key factor for driving up Walmart’s share price, which owns Flipkart in India. In its last funding round, PhonePe was valued at over $1 billion.
According to Morgan Stanley, PhonePe could accumulate revenues of about $1.4 billion, as a base case, from its foray into financial services business alone. The company is already operating in the mutual funds’ segment and plans to further expand its wealth management portfolio.
Indian payments space will witness a growth of over 20% in the next few years and PhonePe might just turn out to be the biggest value creator for Walmart. To jog your memory, the American multinational retail corporation bought a 77% stake in Flipkart last year, worth $16 billion.
Morgan Stanley said, “We model bull case revenues of $70 million from payment $690 million from the distribution of financial services and $2.5 billion from consumer lending.” The revenue calculations are for 2029.
The payments company was founded by former Flipkart executives Sameer Nigam, Rahul Chari, and Burzin Engineer in 2015. It was then acquired by Flipkart within a year. Now, Flipkart’s board is looking to split-off PhonePe into a separate entity. It is also exploring to raise $1 billion from outside investors, such as Tiger Global, Tencent, and DST Global, at a valuation of as much as $10 billion.
PhonePe witnessed the highest number of merchant UPI transactions in August, managing over 343 million transactions. It also claims to have deployed QR code across 6.5 million merchants across 210 cities in India.
Its competitors, Google Pay, and Amazon Pay are both contending to capture a larger share of the market. Even though $10-billion valuation is a new milestone for PhonePe, its arch-rival Paytm is valued at over $15 billion. Also, competition is set to get stiffer as Facebook-owned WhatsApp is yet to foray into payments. It has over 400 million users in India.