NextFin News - In a definitive move that signals the maturation of India’s digital payments ecosystem, Tiger Global and Microsoft are preparing to fully exit their investments in PhonePe through the company’s upcoming initial public offering (IPO). According to an updated draft red herring prospectus filed with the Securities and Exchange Board of India (SEBI) on January 21, 2026, the Bengaluru-based fintech leader is moving forward with a pure offer-for-sale (OFS) of 5.06 crore shares. The filing confirms that while U.S. retail giant Walmart will remain the dominant shareholder, Tiger Global and Microsoft will offload their entire remaining stakes, capitalizing on a valuation that could reach $15 billion.
The news comes as PhonePe, founded in 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, solidifies its position as the primary challenger to Google Pay in the world’s most populous nation. According to TechCrunch, the IPO does not involve the issuance of new equity, meaning the company is not seeking fresh capital but is instead providing a liquidity event for its early and strategic backers. Walmart, through its unit WM Digital Commerce Holdings, plans to sell up to 4.59 crore shares, representing approximately 9% of the company, while Microsoft Global Finance and Tiger Global PIP 9-1 Ltd will liquidate their respective holdings of 36.8 lakh and 10.39 lakh shares.
The timing of this exit is particularly noteworthy given PhonePe’s recent financial performance and regulatory milestones. For the fiscal year ending March 2025, the company reported a 40.5% surge in operating revenue to Rs 7,114.86 crore. While the firm remains in the red, its restated loss narrowed to Rs 1,727.41 crore from nearly Rs 2,000 crore the previous year. Furthermore, the Reserve Bank of India recently granted PhonePe final authorization to operate as an online payment aggregator, a critical regulatory hurdle cleared just days before the updated filing. This regulatory clarity, combined with a dominant 50% market share in Unified Payments Interface (UPI) transactions, has set the stage for one of the most anticipated Indian tech listings of 2026.
From an analytical perspective, the total exit of Tiger Global and Microsoft reflects a broader trend of "portfolio cleaning" among global venture and private equity firms. Tiger Global, which has been a prolific investor in the Indian startup ecosystem for over a decade, is increasingly seeking exits to return capital to its limited partners following a period of aggressive deployment. For Microsoft, the investment was always more strategic than purely financial, aimed at aligning its cloud services with India’s digital transformation. By exiting now, both firms are locking in gains from a valuation that has climbed from $12 billion in early 2023 to an estimated $15 billion today.
However, the decision by these giants to leave entirely—rather than retaining a small stake for future upside—suggests a calculated view on the ceiling of fintech valuations in the current high-interest-rate environment. Under the administration of U.S. President Trump, global markets have faced renewed volatility and shifting trade priorities, prompting institutional investors to favor liquidity and proven business models over long-term speculative growth. For PhonePe, the transition to a public entity means Nigam and his team will face intense pressure to achieve profitability. The company’s expansion into insurance, mutual funds, and its own Android app store, Indus Appstore, represents a high-stakes attempt to diversify revenue beyond the low-margin UPI business.
The impact on the Indian market will be significant. As PhonePe prepares to list on both the National Stock Exchange and the Bombay Stock Exchange, it will serve as a litmus test for the appetite of retail and institutional investors for loss-making but high-growth tech firms. Unlike the disastrous IPO of Paytm in 2021, PhonePe enters the market with the backing of Walmart, which provides a level of corporate governance and financial stability that its predecessors lacked. Walmart’s decision to retain a majority stake even after selling 9% of its holdings indicates that the retail giant still views PhonePe as a cornerstone of its long-term strategy to dominate Indian e-commerce and financial services.
Looking ahead, the successful exit of Tiger Global and Microsoft could pave the way for other Indian "unicorns" to pursue similar paths. If PhonePe achieves its $15 billion target, it will validate the "super-app" strategy in India and potentially trigger a wave of secondary offerings. However, the road to profitability remains steep. With Google Pay continuing to compete aggressively and the government-backed UPI platform constantly evolving, PhonePe must prove that its massive user base of 400 million can be effectively monetized through high-margin financial products. For now, the departure of its early tech-heavy backers marks the end of PhonePe’s venture chapter and the beginning of its life as a mature, public-market participant.
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