Flipkart cofounder Binny Bansal looks to invest about $100-150 million in PhonePe
By Team Startupcity | Friday, 10 March 2023, 08:37 IST
Flipkart cofounder Binny Bansal is in discussion to invest about $100-150 million in PhonePe as part of an ongoing financing round at the digital payments company, people in the know said. The transaction, if it goes through, would be among the largest individual investments in a new-age firm, similar to the $100 million bet taken by Flipkart’s other founder Sachin Bansal in Ola during 2018.
“The amount that he (Binny Bansal) is investing is yet to be finalised. The talks have been on and are likely to close soon,” said a person familiar with the discussions.
PhonePe has already secured nearly $450 million in primary capital from PE major General Atlantic, Tiger Global, Ribbit Capital, among others, in this current funding round at a valuation of $12 billion. Some of the existing shareholders in Flipkart like Bansal, Tiger Global, China’s Tencent, Qatar Investment Authority and Microsoft, were expected to acquire a fresh stake in PhonePe, as the company put together a new ownership structure.
Walmart continues to be the largest investor in PhonePe with around 70% stake.
PhonePe is the dominant online payments app on India’s Unified Payments Interface (UPI) and clocks about four billion transactions monthly, president and CEO of Walmart International, Judith McKenna, had said last month. At the end of 2022, its total payment volume (TPV) touched $950 billion, she said.
It competes directly with Google Pay, Paytm, Amazon Pay and WhatsApp Pay, among others, on the UPI network. PhonePe has said it held a 50.2% market share of UPI transactions by value in December last year.
As per a report, PhonePe was in final stages of discussions to acquire buy-now-pay-later (BNPL) startup ZestMoney as it looks to monetise through financial services.
Bansal, who was instrumental in Flipkart's acquisition of PhonePe in 2016, has stayed on its board and has been closely associated with the company’s founders Sameer Nigam and Rahul Chari.
In fact, Nigam, Chari and Burzin Engineer, had earlier founded Mime360, a digital media distribution company, which too was sold to Flipkart, in 2011 to help the ecommerce player build its digital music distribution platform Flyte.
The deal assumes significance as it comes at a time when the overall technology industry has been facing a long period of slowdown in funding activity.
Aside from PhonePe, Bansal has also put additional funds into Curefoods, a cloud kitchen platform, which was hived off from Cultfit, founded by Mukesh Bansal and Ankit Nagori in 2016. He has bought secondary shares held by Cultfit in Curefoods, said three people familiar with the deal talks. Sources said Bansal’s ownership has risen from under 5% in Curefoods to around 12-13% with the $25-30 million investment.
“After Mukesh Bansal and Nagori split and in 2021, Curefoods took shape separately, Binny Bansal had funded the platform… He is now doubling down by bulking up his shareholding,” stated another person familiar with the situation.
Bansal’s other large investment is in new-age insurance firm Acko where he holds about 8-9% stake and first invested in 2018. Since then, Bansal has put in a total of about $30 million into the firm, people aware of the matter said. Acko is currently valued at $1.1 billion.
The entrepreneur-turned-investor is not just an angel and early-stage backer of Indian startups but has differentiated himself by also ploughing in funds at later stages. And taking on board seats at firms like PhonePe and Curefoods, several people who are aware of Bansal’s thinking said.
His startup investments are routed through different entities like the Singapore- headquartered Three State Capital; 021 Capital – a fund founded by Bansal’s financial advisor Sailesh Tulshan where he is the largest sponsor; as well as xto10x Technologies, which he founded along with former Flipkart senior executive Saikiran Krishnamurthy.
His other portfolio companies include electric scooter maker Ather Energy, urban mobility startup Yulu, lending platform Rupeek, among 80 companies that he has backed as per data from research firm Tracxn.
In 2019, Bansal had planned to roll out a venture capital fund. However, the plan failed to fructify and he has since backed startups from his personal pool of capital.
Bansal sold a portion of his stake worth around $200 million in Flipkart as part of the $3.6 billion funding round that the ecommerce giant had closed that year. Those who invested in that round included Canada Pension Plan Investment Board (CPP Investments), the Singapore government’s sovereign wealth fund GIC and Japan’s SoftBank, among others.
Bansal has taken concentrated bets where he’s been cutting larger cheques for more mature companies, said another person familiar with his strategy.
‘Over the last few quarters, he is also spending more time in India with frequent visits to Bangalore,” said another person on condition of anonymity.
“Besides his investments, he is also spending more time at xto10x. They are contemplating investing in startups through xto10x as well,” a person aware of the matter said.
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