Digital payments service PhonePe is planning for an IPO in 2024-25, reported CNBCTV-18. The company's co-founder and CEO Sameer Nigam told CNBC-TV18 that the company's new ambition is to raise $2 billion which he expects will close at the end of this month.
The fintech platform also secured an additional $200 million in primary capital from Walmart at a pre-money valuation of $12 billion in March. Nigam also told the publication that he wants to give new businesses a couple of years to understand how big they could grow and how much more money needs to be invested.
Nigam also added that the money in the banks would help PhonePe ride out of a tough spot. He further said that this time is not a good time for tech businesses to go public.
Many startups have changed or diverted from their initial IPO plans to 2023 after they observed the situation of their peers and other competitors as they are severely impacted due to the negative market sentiment, fund funding winter and the global macroeconomic uncertainties.
The company had last year announced complete separation from the Flipkart Group, which was completed in December, 2022. Many of the Flipkart shareholders led by Walmart acquired the shares in the recent separation. The company's investors also took a tax hit of Rs 8,000 crore after it decided to move its domicile to India from Singapore.
According to Nigam, PhonePe is well positioned in terms of its payment system with triple digit operating and revenue growth. Nigam said, "We are very close to breaking even on the core business." He is also confident that the company will definitely go public in India.
IPOs
Speaking about Zomato, Paytm, Nykaa and Delhivery that have lost over $18 billion in value since the companies went public, Nigam said that they went public when the VC market in India was at its peak globally and the hit to India's tech stocks was less if you compare them to their global peers.
Talking about Paytm's first-ever quarterly profit on an adjusted basis and its continued consolidated loss, PhonePe's co-founder said that the company would be making a turn around fast. He further appreciated his company's competitor and said that Paytm's business looks fundamentally healthiest today and maybe the markets helped it grow fiscally faster.
Hesitating investors due to global meltdown
When asked about investors dumping high-profile tech shares despite the border market outperforming the global markets, Nigam said that other than the global meltdown, the other reason could be that they did not like the combination of either governance standards or just the business models.
NIgam told CNBC TV18, "The VCs who are very big stakeholders in the decision of where to list startups and therefore domicile them, are starting to turn around. A lot of VCs I have spoken to are hardened by the response to IPOs over the last couple of years in India, as the market is in debt now. The regulators and government are actively looking at ways to facilitate getting venture folks back."
Taking a positive outlook Nigam said, "I think a good change is coming. If I think of the next 3-5 years, I am very hopeful that the best of Indian startups will find attractive valuations, a long retail market cue of interest and people will come back. New startups will have to move less and less to find VCs to invest in their companies."
