PhonePe returns to home shores, moves residence from Singapore to India
For years, Indian startups have moved their headquarters abroad, partly for tax reasons and partly to gain access to global fund flows. But a major Indian startup, years after moving abroad, has now decided to return to its home shores.
PhonePe has completed its move to shift its headquarters from Singapore to India. The process of moving PhonePe’s headquarters back to India had started earlier this year, and has now been completed. The move was part of a corporate restructuring that saw PhonePe become a separate entity from parent company Flipkart.
“Setting up (Flipkart and PhonePe) as separate entities will also add value and create new opportunities for investors to participate in the Indian tech ecosystem – helping to unlock and maximize corporate value for shareholders of the two companies,” they said the two companies in a joint statement. “As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. This also completes the move to make PhonePe a fully India-domiciled company, a process that began earlier this year , the statement says.
PhonePe and Flipkart have had a curious on-off relationship. In December 2015, two Flipkart engineers, Sameer Nigam and Rahul Chari, had quit Flipkart to launch a new payment app they called PhonePe. But just five months later, in April 2016, Flipkart had acquired PhonePe for $20 million. When demonetisation was announced in November 2016, PhonePe had been one of the first apps to come with a UPI solution and it maintains this lead to this day, currently accounting for more than 40% of India’s UPI transactions. As PhonePe accumulated users and expanded its product portfolio, it grew to be worth as much as $12 billion alone, making it India’s highest-valued fintech startup. But in 2022, Flipkart has parted ways with PhonePe and the two are separate entities again.
Crucially, this has also led PhonePe to move its headquarters back to India A move back to India could help the company with its IPO plans and also help it steer clear of regulatory hurdles that foreign firms may face in the fintech sector. “We are an Indian company,” PhonePe CEO Sameer Nigam said earlier this year. “Every office, data center and employee with us is here. There is no reason why we should not contribute to value creation in this market, he said.
PhonePe bucks a trend that has persisted for several years – as many as 20% of “Indian” unicorns are headquartered abroad, including Fractal Analytics, Amagi, CommerceIQ, Hasura, BrowserStack, ChargeBee, Mindtickle, GupShup and others. These startups have moved abroad for a variety of reasons, including tax savings, ease of raising funds and ease of regulatory processes. But over the past few years, the Indian government has been looking to woo these startups back to India, and has even liberalized rules for these companies to list in India. PhonePe is one of India’s most recognizable startups, and also one of its most valuable, and its return could spur many other Indian startups to similarly return to their country of origin.