MUMBAI, India: Walmart-backed Indian fintech firm PhonePe is targeting a valuation of between US$9 billion and $10.5 billion in its planned initial public offering, according to two people with direct knowledge of the matter.

At that range, the listing would raise roughly $900 million to $1.05 billion. Even at the upper end, however, the valuation would fall short of the $12 billion level at which PhonePe raised $100 million in private markets in 2023.

Walmart plans to reduce its stake in PhonePe by about 12 percent in the IPO, while Tiger Global and Microsoft intend to exit their holdings, according to the company's filing. The three investors will sell approximately 50.7 million shares in the offering. PhonePe itself will not issue new shares.

The fintech firm, which competes with Google Pay and Paytm in India, filed for its IPO in September and is aiming to complete the listing by April, one source said. The timeline could shift depending on capital market conditions, including any spillover effects from the Middle East conflict.

Both sources requested anonymity because the discussions are confidential. PhonePe, Walmart, Tiger Global, and Microsoft did not immediately respond to requests for comment.

The proposed valuation and listing timing have not been previously reported.

If completed, the offering would make PhonePe India's second-largest fintech IPO after Paytm's roughly $20 billion debut in 2021. Paytm currently has a market capitalization of about $7.1 billion.

Questions Over Monetization

PhonePe has more than 650 million registered users and processed nearly 10 billion of the 21.7 billion transactions recorded on India's unified payments interface (UPI) in January, according to regulatory data. Despite its scale, payments in India remain a low-margin business.

India launched UPI in 2016 and barred companies from charging fees for the instant payment service to promote digital transactions and reduce cash use in the world's third-largest economy.

PhonePe's losses widened to 14.44 billion rupees ($158 million) in the six months ended September 30, compared with 12.03 billion rupees a year earlier, according to its IPO filing. Revenue rose about 22 percent to 39.18 billion rupees over the same period.

Two portfolio managers who met PhonePe's management during pre-IPO roadshows said enthusiasm around India's fintech sector has cooled. They noted ongoing concerns about the company's ability to monetise its large user base — a key factor that may limit its valuation compared with its last funding round.

"Monetization remains a question mark. Active users aren't growing at the same pace, so the game is all about upsell, and that remains to be seen," one of the portfolio managers said.

Investors also view India's fintech market as crowded, with limited differentiation among major players, according to a third source involved in the deal as a banker.

All three sources spoke on condition of anonymity because they were not authorized to speak publicly.