What’s a market leader worth these days?

That’s the question Indian investors will have to grapple with as digital-payments leader Phonepe looks to go public.

Phonepe, which made its IPO papers public on 21 January, is reportedlyTimes of IndiaWalmart to cut 10 percent stake in PhonePe IPO looking to raise $1.3 billion through an entirely offer for sale (OFS) issue, meant for its investors to stage an exit.

While investment and tech giants like Tiger Global and Microsoft are cashing out their shares fully, American retailer Walmart, which has invested $700 million in Phonepe so far and holds about 72% stake, is putting 9% of the company’s shares on the block. Overall, only 10% of Phonepe is open for public shareholders when the issue goes public, per the company’s updated IPO papers. 

The 10-year-old payments firm has not once veered from its market-leadership position of processing the most UPI payments in the country, even though there are over 80 such apps.

But unlike leaders in other sectors—say, foodtech giant Eternal (formerly Zomato) or insurance marketplace Policybazaar—that listed before its peers, Phonepe, which has a 49% share in payments, is hitting the market four years after its rival Paytm* did.

This is also the time when Paytm—which has 6% market share and is trading about 40% below its listing price—is pulling ahead of Phonepe on financials. In the half-year ended September, Phonepe’s operating revenue of Rs 3,918 crore was slightly behind that of Paytm’s.

It took a lot for Phonepe to join the public-market queue. Its main backer, Walmart, paid nearly $1 billion in tax to the Indian government in 2023 so that the Singapore-registered payments behemoth could flip back to India. That $1 billion could hurt less if Phonepe can list at a valuation of at least $12 billion, which it got during its last fundraise of $450 million from General Atlantic in 2023.

That potential ask of $12–15 billion puts Phonepe’s IPO valuation at 50–65% more than Paytm’s current market capitalisation.