Whalesbook
PhonePe Initiates IPO Process with Significant Shareholder Exit
PhonePe, a leading Indian digital payments platform, has filed its updated draft red herring prospectus (UDRHP) with the Securities and Exchange Board of India (SEBI), marking a significant step towards its initial public offering (IPO). The upcoming public listing will be structured entirely as an offer for sale (OFS), meaning existing investors will divest portions of their stakes, with no new shares being issued by PhonePe itself and therefore no capital being raised for the company.
Major shareholders, including Walmart, Microsoft, and Tiger Global, are set to sell approximately 50.7 million shares, collectively representing about 10% of their holdings. Walmart's investment vehicle, WM Digital Commerce Holdings, plans to offload the largest portion, while Microsoft and Tiger Global are expected to divest their entire stakes. The IPO is being managed by a syndicate of prominent investment banks, including Kotak Mahindra Capital, Goldman Sachs, JPMorgan, Citi, Morgan Stanley, and Jefferies. The company's stock market debut is anticipated to occur around March or April 2026, potentially valuing PhonePe at approximately $15 billion.
Financial Performance: Revenue Growth Contrasts with Widening Half-Yearly Loss, FY25 Shows Improvement
The draft prospectus revealed PhonePe's financial performance for the six months ended September 30, 2025, showing a net loss that widened to ₹1,444 crore ($157.80 million) from ₹1,203 crore in the corresponding period of the previous year. However, revenue during this half-year period saw a considerable increase of about 22%, reaching ₹3,918 crore.
Looking at the full fiscal year 2025 (ending March 31, 2025), PhonePe demonstrated a more positive financial trajectory. Operating revenue surged by 40% year-on-year to ₹7,115 crore, up from ₹5,064 crore in FY24. This growth was primarily driven by its payments business, which accounted for approximately 85% of total operating revenue. The company successfully narrowed its consolidated net loss by 13.4% to ₹1,727.4 crore in FY25, down from ₹1,996.1 crore in FY24. Furthermore, PhonePe achieved a significant milestone by turning free cash flow positive, generating ₹1,202 crore from its operations in FY25. Adjusted Profit After Tax (PAT), excluding employee stock option costs, more than tripled to ₹630 crore in FY25.
Market Dominance and IPO Significance
PhonePe commands a leading position in India's digital payments market, holding over 45% market share in Unified Payments Interface (UPI) transactions by volume. The platform processes billions of transactions monthly and serves over 600 million registered users, underscoring its extensive reach across the country. The company's public listing is poised to be one of the largest fintech IPOs in India and is expected to set a crucial benchmark for other new-age technology companies and unicorns considering public markets. The Indian fintech sector continues to grow rapidly, with ongoing trends indicating a focus on scale, profitability metrics, and consolidation.