Bengluru-based firm PhonePe is scaling up its financial services and wealth management services, and these 2 acquisitions are part of the firm plans to diversify its services, according to people familiar with the matter.
Walmart-owned PhonePe is acquiring two wealth management companies WealthDesk and OpenQ. While the company did not disclose the deal value, a source reports that the collective value of the acquisitions is around $75 million and the deals are a mix of cash and stock. WealthDesk is estimated to be valued at around $50 million and OpenQ’s valuation is somewhere around $20 million.
Bengaluru-based firm PhonePe is scaling up its financial services and wealth management services, and these 2 acquisitions are part of the firm plans to diversify its services, according to people familiar with the matter.
Early this year, Phonepe applied to the Securities and Exchange Board of India (Sebi) for a mutual fund (MF) license, joining other fintech rivals to set up an asset management company (AMC).
PhonePe forayed into financial services in 2017 with the launch of gold providing users with a convenient option to buy 24-karat gold, and later launched silver on its platform. It has since introduced several Mutual Funds and Insurance products like tax-saving funds, liquid funds, international travel insurance, life insurance, and insurance for the Covid-19 pandemic.
PhonePe expects to get almost half of overall revenues to come from financial services. The company also had plans to tap merchant lending space, and stockbroking space and build an asset management company.
PhonePe has made three acquisitions and spent over $60 million on them, according to the data analytics platform Tracxn. Key acquisitions include App Bazaar (May 2021) and Zopper Retail (Jul 2018). It has invested in multiple sectors such as mobile app distribution, internet first insurance platforms, and in-store retail tech.
The latest development of acquisition comes after PhonePe raised about $297 Mn from its Singapore-based parent entity. On March 23 and March 24 this year, PhonePe passed two resolutions to allot a cumulative of 2.5 Mn of equity shares to PhonePe Singapore to raise money.
By acquiring these two startups, PhonePe is following in the footsteps of Amazon and Google. While Amazon participated in the fintech startup small case Technologies’ $40 Mn funding round, on the other hand, Google has joined hands with major Indian banks to offer online loans to consumers.
Wealth Desk: Founded in 2016, the Mumbai-based WealthDesk is an online wealth management platform that develops the unified wealth interface (UWI) for the asset and wealth management ecosystem. It claims to have over 50 partners working across categories. It is looking to grow further by integrating with more partners. In June 2022, WealthDesk closed its Pre-Series A funding round at $3.2 Mn.
OpenQ-: Founded in 2018 by Ujjawal Jain and Sujit Modi, the Mumbai-based OpenQ is an online wealth management platform that offers factor-based equity index, thematic investment products, trading baskets, asset allocation, and investment analytics services to institutional as well as retail investors.
The founder and the entire team of WealthDesk will be working as a part of the PhonePe group and both the platforms will remain independent. WealthDesk will continue to remain an open platform for all players, and the founder Ujjwal Jain will be leading the company.
“WealthDesk currently has over 50 partners across categories already working with them and we expect their platform to scale further by integrating with more partners and to become a gold standard for investment technology,” said a PhonePe spokesperson.
WealthDesk’s vision is to create an internet-scale investment technology ecosystem by building the United Wealth Interface (UWI) for the Asset and Wealth Management ecosystem on top of broking/transactional platforms in India. The interoperability offered by WealthDesk’s platform offerings is said to allow all ecosystem stakeholders such as brokers, AMCs, Investment Advisors, Research firms, etc, to integrate, and push investment products innovation.
While OpenQ is a smart beta wealth management platform that designs investment strategies and optimal portfolio construction advice. “Post-acquisition, OpenQ will be instrumental in creating the Wealth Ecosystem for the PhonePe Group,” the spokesperson added. The deal is subject to necessary regulatory approvals.
Noteworthy is the fact that, after digital payments, financial services have become the next big battleground for players such as PhonePe, Amazon, Google, and Paytm. The size of the Indian financial services market could touch around $340 billion in the next few years.
According to a report, India is anticipated to become the fourth largest private wealth market globally by 2028. The country’s private wealth market will touch INR 95 Tn ($1.26 Tn) while investor accounts will grow over 3X to reach 130 Mn by 2025.
Another report by Invest India states that the Indian investment tech market is estimated to touch over $60 Bn by FY25, from its current market size of $20 Bn. At present, India has the highest fintech adoption rate at 87% against a global average of 64%.
Some of the key players in the investment tech industry are AssetPlus, UpStox, Scripbox, and Groww.
