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Investors forked out Rs 8,000 cr to shift base from Singapore to India, says PhonePe CEO Sameer Nigam

Investors forked out Rs 8,000 cr to shift base from Singapore to India, says PhonePe CEO Sameer Nigam

“If you want to move to India as a domicile, we have to do a fresh market valuation and pay tax on the delta. Our investors have paid almost Rs 8000 crores in taxes just to allow us to come back to India,” Sameer Nigam, Co-founder and CEO, PhonePe said at a live YouTube session

“If you want to move to India as a domicile, we have to do a fresh market valuation and pay tax on the delta," Sameer Nigam, Co-founder and CEO, PhonePe said at a live YouTube session “If you want to move to India as a domicile, we have to do a fresh market valuation and pay tax on the delta," Sameer Nigam, Co-founder and CEO, PhonePe said at a live YouTube session

Investors of Flipkart-owned digital payments firm PhonePe paid Rs 8000 crore in taxes to shift its domicile to India from Singapore. 

“If you want to move to India as a domicile, we have to do a fresh market valuation and pay tax on the delta. Our investors have paid almost Rs 8000 crores in taxes just to allow us to come back to India,” Sameer Nigam, Co-founder and CEO, PhonePe said at a live YouTube session. 

The company completed the move in October when it shifted all businesses and subsidiaries of PhonePe Singapore to PhonePe Pvt Ltd – India, including its insurance broking services and wealth broking businesses. 

Nigam, along with the company’s Co-founder and CTO Rahul Chari, addressed questions around PhonePe’s recent $350 million fundraise, its redomicile and future plans during the live session.

“I think for the mission PhonePe is on - which is solving for at-scale financial inclusion and digitisation - the move to India was right, India is where we started and where we are focused on. And to that end, for various reasons like being a highly regulated entity and wanting to eventually list here, the change of domicile to India for PhonePe as a business and as a company is the right answer,’ he explained the reasons behind the move.

The company also had to migrate existing ESOPs of over 3000 employees by issuing new ESOPs under PhonePe India’s new plan, which Nigam said was a major challenge. 

“Another challenge was to convince several thousand employees that their ESOPs are back to zero vesting at a one-year cliff, because the law in India says if you migrate, you still have to start with a new one-year cliff. It's very hard for startups, particularly early-stage startups, to convince employees that their ESOP vesting status reverts back to zero,” he said. 

Nigam also spoke about the need for more progressive Indian laws that allow start-ups to move back to India. 

PhonePe also announced a complete separation from its parent company and e-commerce giant, Flipkart in December. Both the companies now function as separate entities with Walmart continuing to be the majority stakeholder in them. Nigam said the spin-off from Flipkart offered the company an opportunity to raise funds from other investors who may have their investment strategies more aligned to fintech and payments where PhonePe operates.

Weeks after the spin-off announcement, PhonePe raised $350 million from private equity firm General Atlantic. The transaction was done at a pre-money valuation of $12 billion, making the company the most valued (privately) fintech firm in the country. This round is the first tranche of an up to $1 billion total fundraise.  

“General Atlantic, is a really good blue chip global investor that has a long view on companies, which gives us the flexibility to be able to actually do at-scale investments in new sectors like insurance, lending, broking or ONDC. They understand what we're trying to do really well as they are tracking the ecosystem. So, I think it was just easy alignment at several levels, obviously excited to have them anchor the round,’ Sameer added.

Rahul Chari said the company will leverage the new initiatives that are coming on UPI and is looking at launching new products and offerings including lending on the merchant side, lending on the consumer side, and new open API initiatives like account aggregator and ONDC. 

Published on: Jan 25, 2023, 7:41 PM IST
Posted by: Priya Raghuvanshi, Jan 25, 2023, 7:38 PM IST
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