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Digital wallet PhonePe raises $85 million from Singapore parent to expand into rural India

PhonePeIndian FinTech firm PhonePe has raised $82.5 million (INR 5.8 billion) from its Singapore-based parent PhonePe Private Ltd (formerly Flipkart Payments Private Limited), according to the company’s RoC (Registrar of Companies) filings.

According to the documents accessed on business intelligence platform Tofler, the Bengaluru-based mobile wallet has alloted 1,381,278 equity shares to the Singapore entity at INR 4,230 each.

PhonePe, which was acquired by Indian e-commerce giant Flipkart in early 2016, is now a part of global retailer Walmart that acquired Flipkart in May last year for a whopping $16 billion. However, Walmart is planning to hive-off PhonePe from Flipkart and run it as a separate entity. According to reports, the digital payments company is looking to raise $1 billion from investors including China’s Tencent to garner a larger pie in the burgeoning digital payments ecosystem in India.

With the recent capital infusion, PhonePe has received around $238 million from its parent entity in the current Indian financial year (FY 19-20) even as the competition in the country’s digital payment space intensifies with Google Pay snapping up a lion’s share.

India’s digital payment ecosystem has undergone a paradigm shift in the past three years post the launch of UPI (unified payments interface), an instant real-time payments system, demonetisation and the government’s constant push towards making the country a less-cash economy.

Even as PhonePe’s revenue increased five times, its losses jumped more than two-folds in FY 18 at INR 19 billion, is likely to use the recent funding in expanding its operations and network in the small Indian cities.

According to a blog on the company’s website, digital payments have witnessed a massive growth in India over the last 3 years and that the growth is no longer confined to the country’s top metros. It further added that the company’s next phase of growth is being driven by over 500 million Indians residing in ‘Bharat’ (rural market) where smartphone penetration, cheaper data, intuitive and simple app design and more local language context are propelling the move towards the adoption of digital payments. With over 8 million merchants over 200 cities in India, PhonePe says that over 55% of the transactions on its platform is coming from Tier 2 and 3 cities such as Mysore and Vizag.

Founded in 2015 by former Flipkart executives –Sameer Nigam, Rahul Chari and Burzin Engineer, PhonePe is currently valued at $7 billion, according to a report by Morgan Stanley in August this year.

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