PhonePe’s valuation has more than doubled to more than $12 billion in a new round of funding as the Indian fintech giant prepares for a life without parent company Flipkart. The Bengaluru-headquartered startup said it raised $350 million and expects to raise another $650 million as part of the round, a remarkable achievement at a time when fundraising activity has slowed globally as investors become cautious.

General Atlantic led the first tranche of the investment. The company did not name the funding round, but said it was valued at $12 billion pre-money. australiabusinessblog.com reported last month that PhonePe was closing a major funding round with a pre-money valuation of $12 billion.

$12 billion is a staggering valuation for PhonePe, which was valued at $5.5 billion at the end of 2020. PhonePe currently generates less than $450 million in annual revenue. Publicly traded rival Paytm, which projects revenues of $1 billion in fiscal year ending March 2023, currently has a market cap of $4.2 billion.

Walmart, a majority investor in PhonePe, is expected to participate in the current funding round, according to a source familiar with the matter.

PhonePe is undoubtedly a clear leader in the mobile payment market on UPI, a network built by a coalition of retail banks in India. UPI has become the most popular way for Indians to transact online, processing over 7 billion transactions per month. The seven-year-old PhonePe manages about 40% of all these transactions. The startup says it has more than 400 million registered users and more than 35 million offline merchants rely on the platform.

One concern for PhonePe’s growth was that the Indian regulator imposed a market cap check on every player, but the deadline for the new guidelines was extended last month and will now not take effect until 2025, giving PhonePe another two years can grow quickly.

“I would like to thank General Atlantic and all of our existing and new investors for the trust they have placed in us. PhonePe is proud to help lead India’s digitization efforts nationwide and believes that this powerful public-private partnership has made India’s digital ecosystem a global example. We are an Indian company, built by Indians, and our latest fundraising will help us further accelerate the Government of India’s vision of digital financial inclusion for all,” said Sameer Nigam, founder and CEO of PhonePe, in a statement.

“We look forward to delivering the next phase of our growth by investing in emerging business lines such as insurance, asset management and lending, while also facilitating the next wave of growth for UPI payments in India.”

PhonePe was founded in 2015 and was acquired by e-commerce giant Flipkart within a year. The two parted ways last month and now Flipkart has no interest in the payment company. The divorce will have some impact on Flipkart’s valuation. In July last year, Flipkart Group raised $3.6 billion at a valuation of $37.6 billion. Flipkart has no plans to re-enter the mobile payments market, australiabusinessblog.com previously reported.

At stake is the Indian payments market, which Credit Suisse estimates will be worth $1 trillion over the next two to three years, up from about $200 billion in 2020. Google and Meta are among the players investing heavily to drive the market. to conquer.

The payments company has also moved its base to India, a move that sparked a major tax event for its investors. Walmart confirmed earlier this month that it had paid the Indian government most of the nearly $1 billion in tax owed as part of PhonePe moving its base from Singapore.

PhonePe said it will use the new funds to make significant infrastructure investments, including developing data centers and building more financial services. The company also plans to invest in new businesses, including insurance, wealth management and loans.

“Sameer, Rahul and the PhonePe management team have pursued a clear mission to drive digitalization of payments and significantly broaden access to financial tools for the people of India. They remain focused on driving adoption of inclusive products developed on the open API-based ‘India stack’,” said Shantanu Rastogi, Managing Director and Head of India at General Atlantic, in a statement.

“This vision aligns with General Atlantic’s long-standing commitment to supporting high-growth companies focused on inclusion and empowerment. We are excited to partner with the PhonePe team to enable the next generation of digital innovation in India.”