Walmart-Backed PhonePe Eyes India’s Second-Largest Fintech IPO With $9–10.5 Billion Valuation

India’s digital payments story has been one of the most defining narratives of the country’s startup ecosystem over the past decade. From the early days of wallet-based payments to the explosive adoption of UPI, fintech platforms have reshaped how millions of Indians transact daily. At the center of this transformation stands PhonePe, one of the country’s most widely used digital payments platforms.

Now, the Walmart-backed fintech giant is preparing for a major milestone in its journey. According to a report by Reuters, PhonePe is planning to go public in India at a valuation ranging between $9 billion and $10.5 billion, potentially raising close to $900 million to $1.05 billion through its initial public offering (IPO).

If the listing proceeds as expected, it would mark India’s second-largest fintech IPO after Paytm’s blockbuster listing in 2021, placing PhonePe among the most closely watched startup listings in the country.

But the road to the public markets is unfolding amid a more cautious investor climate, growing competition in fintech, and lingering questions around how digital payments companies can effectively monetise their massive user bases.

A Massive Payments Platform Preparing for Public Markets

Founded during the early wave of India’s digital payments boom, PhonePe has grown into the largest player in the UPI ecosystem.

The company currently boasts more than 650 million registered users, making it one of the most widely adopted fintech apps in the country. Its scale is evident in transaction data as well. In January alone, PhonePe processed nearly 10 billion transactions, accounting for almost half of the 21.7 billion total UPI transactions recorded during the month, according to regulatory figures.

This dominance has helped PhonePe maintain a strong lead over competitors such as Google Pay and Paytm, both of which are also key players in India’s digital payments landscape.

However, despite this scale and market leadership, PhonePe’s IPO valuation is expected to fall below the $12 billion valuation at which the company raised $100 million in private funding in 2023. The expected $9–10.5 billion range suggests investors are approaching fintech listings with greater caution than in the past.

Existing Investors to Offload Stakes

The upcoming IPO will primarily serve as an exit route for existing investors rather than a fresh capital raise for the company.

According to the report, PhonePe will not issue new shares as part of the IPO. Instead, current shareholders will sell portions of their holdings in the offering.

As part of this process:

• Walmart, which owns a majority stake in PhonePe, is expected to reduce its stake by about 12%.

• Tiger Global and Microsoft are planning to fully exit their investments in the company.

Together, the three investors are expected to sell around 50.7 million shares through the public offering.

This structure means the IPO will largely function as a liquidity event for early backers rather than a fundraising exercise for the fintech platform itself.

Timing the Listing Amid Global Uncertainty

PhonePe initially filed for its IPO in September, and sources familiar with the matter indicate the company is aiming to complete its listing by April.

However, the timeline may still shift depending on broader market conditions. One source noted that geopolitical developments, including the Iran–Israel conflict, could influence investor sentiment and impact the timing of the listing.

Representatives from PhonePe, Walmart, Tiger Global, and Microsoft did not immediately respond to Reuters’ requests for comment on the plans.

Chasing Paytm’s IPO Legacy

If PhonePe successfully completes its listing, it will become India’s second-largest fintech IPO, trailing only Paytm’s $20 billion listing in 2021.

However, the comparison also reflects how dramatically the fintech landscape has evolved since then.

Paytm, once valued at over $20 billion during its IPO, currently has a market capitalisation of about $7.1 billion, highlighting how investor sentiment toward fintech companies has shifted in recent years.

The experience of Paytm’s public market journey has made investors far more cautious when evaluating fintech IPOs, particularly those operating in low-margin segments such as digital payments.

The Monetisation Puzzle

Despite its massive scale and leadership in UPI transactions, PhonePe faces a challenge common to most digital payments platforms in India: monetisation.

India’s Unified Payments Interface (UPI), launched by the government in 2016, revolutionised digital payments by allowing instant bank-to-bank transfers at no cost to users. To accelerate adoption and reduce dependence on cash, the government does not allow companies to charge fees on most UPI transactions.

While this policy has dramatically increased digital payment adoption across the country, it has also made the core payments business a low-margin or near-zero-margin activity for fintech companies.

As a result, platforms like PhonePe must rely on additional financial services and cross-selling opportunities to generate revenue.

Revenue Growth But Rising Losses

Financial data included in PhonePe’s IPO filings reflects the complexity of this business model.

For the six months ending September 30, the company reported:

• Revenue growth of around 22%, reaching ₹39.18 billion

• Losses widening to ₹14.44 billion ($158 million)

This compares with losses of ₹12.03 billion during the same period a year earlier, indicating that while PhonePe continues to grow its revenue base, profitability remains elusive.

The financials underscore the broader challenge facing fintech companies built around digital payments infrastructure: scale is massive, but turning that scale into sustainable profits remains difficult.

Investor Sentiment Turning Cautious

Investor enthusiasm around fintech startups has cooled in recent years, according to market participants involved in the IPO discussions.

Two portfolio managers who attended pre-IPO roadshows with PhonePe’s management said that while the company’s scale and leadership in UPI are impressive, questions remain about how effectively it can monetise its user base.

One of the portfolio managers noted that user growth is no longer accelerating at the same pace, meaning future revenue expansion will depend heavily on upselling financial services to existing users.

“Monetisation remains a question mark,” the investor said. “Active users aren't growing at the same pace, so the game is all about upsell — and that remains to be seen.”

Another banker involved in the IPO process added that India’s fintech market has become increasingly crowded, with several companies now offering similar services across payments, lending, insurance, and wealth management.

A Defining Moment for India’s Fintech Ecosystem

PhonePe’s public listing will likely serve as a critical test for India’s fintech sector, particularly in the post-Paytm era.

The company enters the market with several advantages: a dominant position in UPI transactions, hundreds of millions of users, and the backing of global retail giant Walmart. Yet it must also convince public market investors that it can translate scale into sustainable revenue streams.

As India’s digital payments ecosystem continues to mature, PhonePe’s IPO could become one of the most closely watched startup listings of the year, offering fresh insights into how investors now value fintech companies in one of the world’s fastest-growing digital economies.

Whether the market rewards its scale and dominance — or remains cautious about the monetisation challenges ahead — will soon become clear.