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The UPI-enabled digital payment platform PhonePe has secured $ 28 million in a new round of financing from Flipkart and comes four months after raising Rs 585.66 crore from its Singapore-based portfolio entity.
Entrackr had exclusively reported Development in December.
Flipkart had also injected $ 56 million into its payment arm in November last year. With the latest investment round, PhonePe has accumulated around $ 928 million in total capital since its acquisition in early 2016.
Lately, PhonePe seems to be changing the path of growth at any cost in search of profitability. Encased in an intense battle with Google Pay to dominate the UPI ecosystem, the company’s CEO, Sameer Nigam, recently revealed PhonePe’s plan to become profitable by 2022 and go public in 2023.
Nigam spoke about profitability and went public as a surprise to many as the company has been burning up a lot of capital. During fiscal year 19, PhonePe spent Rs 2,153 million to earn Rs 184 million in operating income. That Recorded a 2.4X jump in losses to Rs 1,907 crore over the same period.
Looking at the huge gap between expenses and revenues, it seems difficult for the company to optimize profitability while maintaining growth.
Last year, the Flipkart board gave the final go-ahead to privatize PhonePe as a separate company. According to media reportsThe company was in talks with Tencent and Tiger Global to raise $ 1 billion at a valuation of $ 8 billion.
However, the talks did not culminate in an agreement.
The new infusion will help PhonePe keep up with the UPI ecosystem. However, the stretch is very small compared to its monthly consumption, which amounts to more than $ 15 million.
Raising external capital is the need for PhonePe time and it would be interesting to see in what valuation it does. It is worth noting that the company has been in talks with Tencent for over a year, but the round has yet to materialize.
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