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PhonePe plans to use the $50 million funding received from Chinese conglomerate Tencent for its overseas acquisition and to support its Singapore office operations, according to a source close to the development. While all PhonePe employees are based in India, the company has a small team in Singapore looking after legal and M&A proceedings, the source added.
Tencent has acquired a minority (1.8 per cent) stake in PhonePe as part of the company’s $700 million funding round which was announced in December 2020. PhonePe has been in talks to acquire content and app discovery platform Indus OS (registered name - OSLabs) for $60 million since May 2021. However, the deal could not be completed because of the objection raised by existing investors, Affle Global and Ventureast. The existing investors value Indus OS at $90 million, while PhonePe had offered to acquire about 90 per cent stake in the company for $60 million. Since then the deal has been in a legal tussle.
“The case is expected to be closed in a few months. Companies had a court hearing a few months back and they both also participated in an extraordinary general meeting (EGM) in July, which was mandated by the Singapore High Court,” the source told BusinessLine . In July 2021, Affle Global claimed to have gotten a favourable ruling from Singapore HC. However, PhonePe refuted the claim at that time and said that no final ruling has come out yet.
“In addition to IndusOS, PhonePe had also acquired MapMyIndia in the past. This acquisition is being used to power the PhonePe store feature which helps users discover nearby stores. It is similar to Google Maps but it is built for the local audience,” the source added.
Synergies
Indus OS has built Indus App Bazaar which has a portfolio of 4 lakh localised Indian apps, making it an Indian alternative to platforms like Google PlayStore and AppStore. PhonePe is looking to integrate the Indus App Bazaar in PhonePe Switch, which hosts m-sites (mobile sites) for a variety of apps like Myntra, Zivame, Grofers, Netmeds etc.
The Indus OS acquisition can potentially strengthen the super app ambitions of PhonePe. Currently, PhonePe has expanded into a majority of verticals encompassing all things money. It allows users to send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold and make investments. PhonePe forayed into financial services in 2017 with the launch of Gold, which enabled users to buy 24-karat gold on its platform.
Since then, the company has launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance, and Corona Care, a dedicated insurance product for the Covid-19 pandemic among others. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 talukas nationally.
PhonePe is also the market leader in terms of UPI transactions. The NPCI data for the month of July 2021 showed that the company holds about 46% per cent of the market share by transaction volume. Media reports have claimed that PhonePe’s Indian competitor Paytm is also planning to launch its super app by the end of this year.
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