PayPal reportedly in talks with Flipkart-owned PhonePe for funding

Flipkart’s PhonePe is in talks with global online payments giant PayPal to raise capital independently at a $500 million valuation, according to a Times of India report.

Citing people in the know of the things, the report said that PhonePe has held preliminary talks with US-based digital payments company PayPal Holdings for a “share sale.” Apparently, PayPal isn’t the only one that is keen to have a pie in the India’s growing e-payments market; Naspers-owned PayU had also held initial talks with the startup.

Post demonetization, PayPal is having keen eyes on India’s e-wallet space. In December, the online payments giant had almost finalised a deal to pick up a 25 percent stake in Snapdeal-owned FreeCharge for around $200 million. But the deal fell through, and hence PayPal has turned to PhonePe now.

“PhonePe’s valuation expectation is based on the huge Flipkart user base, at around 75-80 million, which the payments app can possibly tap into. The talks have still not reached a stage where the company has received any term sheets, though,” a source quoted in the report.

PhonePe was launched in December 2015 by former Flipkart executives Sameer Nigam, Rahul Chari and Burzin Engineer and was acquired by Flipkart last April. The company also committed $100 million to PhonePe over a three year period.

In January, PhonePe said it crossed 10 million downloads on Google Play. The Yes Bank-powered digital payments app claims to be doing over a lakh transactions every day.