General Atlantic’s PhonePe bet faces fresh valuation questions as IPO approaches

As PhonePe inches closer to its stock market debut, fresh questions are emerging around the valuation assumptions underpinning one of its most prominent backers, General Atlantic, particularly in light of recent financial disclosures and regulatory headwinds.

The timing of General Atlantic’s additional investment in October 2025 has drawn attention. By then, regulatory restrictions on credit card-based rent payments and real-money gaming (RMG) transactions had already been announced.

Despite revenue pressure from regulatory overhang, General Atlantic continued to invest in the company with no correction in its valuation. In its DRHP, PhonePe has disclosed that nearly 15% or ₹590 crore of its ₹ 3918 crore of reported H1 FY26 revenues (until September 30, 2025) was impacted with restrictions on credit card-led rent payments and ban on the real money gaming (RMG) sector. This impact broadens to 19% if PIDF based incentive is added to the mix.

The development raises questions about the assumptions that supported the valuation at which fresh capital was deployed, especially given that a meaningful portion of revenue was already under structural pressure.

General Atlantic first invested $350 million in January 2023, valuing PhonePe at around $12 billion. The investments were supported by a valuation framework prepared by KPMG in November 2022, as reported by the media. However, the report shows that PhonePe has continued to severely underperform forecasts.

Forecast financial information prepared in connection with the valuation had projected a sharp acceleration in profitability.

According to the KPMG forecast table, PhonePe’s EBITDA was estimated at ₹1,797 crore for CY FY25 and projected to rise further in CY FY26, with margins expanding significantly over the medium term. However, reported numbers suggest a more measured trajectory. Adjusted EBITDA stood at ₹651.8 crore in FY24 and ₹1,477.2 crore in FY25, while the company reported ₹253.9 crore for the first half of FY26, lower than estimates, the DRHP shows. The implied annualised run rate remains materially below the CY FY26 projection cited earlier.

The company has also missed revenue forecasts as part of the KPMG report claiming to clock revenues of ₹9139 crore in FY25. The Bengaluru based fintech has clocked revenues of ₹ 7631 crore in FY25.

Further, when General Atlantic had first invested in PhonePe, the Bengaluru-headquartered fintech’s reported revenues stood at ₹2,914 crore in FY23. In contrast, rival Paytm had reported revenues of ₹7,990 crore during the same period, nearly three times higher, but was valued at $5.5 billion by public markets on account of losses.

Despite missing forecasts and pressures on revenue streams, PhonePe is targeting an IPO valuation of approximately $13–$15 billion, representing a significant premium of roughly 19%–20% over its last valuation of $12.6 billion.

Further, its proposed IPO is structured entirely as an offer for sale, with no fresh issue of shares. Proceeds from the listing will therefore accrue to existing shareholders rather than being deployed into the business. For public market investors, this places greater emphasis on valuation sustainability, revenue quality, and governance standards rather than growth funding.

The broader context also features prominently in investor discussions. General Atlantic’s India portfolio has previously included high-profile bets such as Byju's which later faced valuation and regulatory challenges. While the businesses are not directly comparable, the experience has sharpened focus on governance standards, sustainability of projections and discipline in private market pricing.