PhonePe Initiates IPO Process with Draft Red Herring Prospectus

PhonePe, a major player in fintech owned by Walmart, has embarked on its Initial Public Offering (IPO) journey by submitting a Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) through a confidential approach. This initiative is a crucial step in what is considered one of the most awaited IPOs within the Indian technology sector.

Utilising Confidential Filing Mechanism

The firm, based in Bengaluru, is capitalising on SEBI’s confidential filing mechanism established last year. This allows organisations to hide sensitive financial and strategic information until the listing date approaches. PhonePe aims to secure Rs 12,000 crore through its public offering.

Details of the Offer

According to a report from Moneycontrol, the public offering will entirely consist of an offer for sale (OFS), where significant shareholders such as Walmart, Microsoft, and Tiger Global will reduce their stakes. To assist in achieving its $15 billion valuation during the IPO, PhonePe has enlisted the services of investment banks including Kotak Mahindra Capital, Citi, Morgan Stanley, and JP Morgan.

Full-Stack Financial Services Platform

As a comprehensive financial services platform, PhonePe encompasses payment processing, insurance, mutual funds, and lending. The upcoming IPO not only serves as an exit mechanism for its investors but also provides the company with additional resources to expand its credit and wealth management ventures.

Impressive Revenue Growth

PhonePe has demonstrated a significant year-on-year revenue increase of 40.5%, rising to Rs 7,115 crore in FY25 from Rs 5,064 crore in FY24. In the same financial year, its adjusted profit, excluding ESOP expenses, surged fivefold to reach Rs 630 crore, up from Rs 117 crore in FY24. Data from the National Payments Corporation of India (NPCI) shows that as of August, PhonePe commanded a substantial 45.74% of the digital payments market by volume and 48.26% by value.

Following in the Footsteps of Other Companies

By taking the confidential DRHP route, PhonePe follows the lead of other companies like Meesho, Shadowfax, Physics Wallah, Groww, Shiprocket, boAt, and Aequs, who have also pursued confidential filings as they prepare for entry into the public markets.