The regulatory pathway for one of India’s most significant fintech listings is now clear as major global backers prepare to monetise their long-term bets
The landscape of the Indian digital payments sector is set for a historic realignment following the updated regulatory filings for the PhonePe IPO. According to the latest documents submitted to the Securities and Exchange Board of India, the public issue will be a pure offer-for-sale of 5.06 crore equity shares. This structure confirms that the company is not seeking new capital but is instead providing a massive liquidity event for its high-profile early and majority-investors.
Walmart, the majority owner of the fintech giant, plans to offload approximately 4.59 crore shares through its subsidiary, WM Digital Commerce Holdings. At the estimated valuation of 15 billion dollars, this tranche is valued at roughly 9,173 crore rupees. Simultaneously, tech behemoth Microsoft and venture capital firm Tiger Global have declared their intention to exit their holdings entirely, marking the end of their direct investment journey with the Bengaluru-based platform.
The strategic departure of global tech giants
The decision by Microsoft and Tiger Global to fully exit through the PhonePe IPO signals a transition from venture-led growth to public market maturity. Microsoft, which held a 0.71 per cent stake, and Tiger Global, with a 0.2 per cent holding, are utilising the listing to book profits on their initial entries. While their stakes were relatively small in percentage terms, their full departure reflects a clean break that allows the company to broaden its institutional investor base.
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Walmart is taking a more measured approach by paring its 71.77 per cent stake by roughly 9 per cent. Even after this significant sale, the American retail giant will remain the undisputed promoter and controlling shareholder. This partial divestment allows Walmart to recoup a portion of its massive 2022 redomiciliation costs while maintaining its long-term strategic interest in India’s booming digital economy.
Financial health and the cost of acquisition
One of the most revealing aspects of the recent filings is the disclosure of the weighted average cost of acquisition for the selling shareholders. The documents show a uniform cost of 1,996.80 rupees per share for those participating in the offer for sale. With the current secondary market transactions valuing the shares at approximately 2,337 rupees, the selling parties are poised to realise a significant premium over their initial investment costs.
The company’s financial performance leading into the PhonePe IPO shows a complex but improving picture. Revenue from operations for the first half of the 2026 fiscal year rose 22 per cent to 3,918 crore rupees. Although net losses widened during this period due to high employee stock option costs and regulatory shifts, the company has managed to turn free cash flow positive. This focus on operational cash flow is a key pillar of the narrative being presented to potential public market investors.
Regulatory hurdles and the UPI volume cap
A significant shadow hanging over the PhonePe IPO is the impending 30 per cent market share cap on UPI transactions. Currently, the platform commands nearly 49 per cent of the market, far exceeding the threshold proposed by the National Payments Corporation of India. While the compliance deadline has been extended to December 2026, the risk remains that the company may have to curtail user onboarding to meet regulatory requirements.
The prospectus acknowledges this risk, noting that any forced reduction in market share could impact future growth trajectories. To mitigate this, the company has aggressively diversified into “New Platforms”, including stockbroking and insurance distribution. The success of these verticals will be crucial in proving to investors that the business can thrive even if its primary engine, UPI payments, is subject to regulatory constraints.
The Hinge Point
The exit of Microsoft and the significant stake sale by Walmart mark the exact moment where PhonePe shifts from being a “global corporate subsidiary” to a “publicly accountable Indian institution.” This is the hinge point because the 9,173-crore sell-down by Walmart is not just a financial transaction; it is a test of whether the Indian public markets can absorb and value a massive, high-growth fintech utility that is currently in a state of regulatory flux. The story changes here because the “safety net” of total multinational ownership is being partially withdrawn, forcing the company to prove its standalone viability to a much more diverse and demanding set of shareholders.
What can no longer remain the same is the perception that PhonePe’s dominance is permanent. By including the looming UPI volume cap as a primary risk factor in the same document that facilitates a multi-billion dollar exit for its backers, the company is effectively handing the “regulatory risk” over to the public. This IPO will determine whether the Indian market values a platform based on its current market leadership or discounts it due to the high probability of forced contraction. This is the ultimate transition of the Indian fintech dream from a venture capital experiment to a mainstream economic reality.