PhonePe Pre-IPO Move: Founders Offload ₹3,937 Crore; New Regulations Lead to ₹1,500 Crore Hit

As PhonePe approaches its public listing, recent regulatory changes and shareholder liquidity events have significantly influenced its revenue structure, as per Entrackr. The company's updated draft red herring prospectus (DRHP) provides insights into these developments. 

Founders’ Secondary Sale and Tax Obligations 

PhonePe has recorded secondary share transactions worth ₹5,771 crore since 2023. A notable transaction occurred in September 2025 when co-founders Sameer Nigam and Rahul Chari sold shares worth ₹3,937 crore to General Atlantic.  

This sale was primarily to address tax obligations related to the exercise of ESOPs. The structured arrangement ensured that the proceeds were used to settle these taxes. 

Regulatory Impact on Payment Categories 

In September 2025, PhonePe discontinued its credit card payment services for rent and related categories following directives from the Reserve Bank of India under the payment aggregator framework. This exit resulted in a significant revenue impact.  

The rent-related payments contributed ₹518 crore in the 6 months ending September 2025 and ₹1,262 crore in FY25, accounting for 8.92% of PhonePe’s total gross margins. 

Exit from Real Money Gaming (RMG) 

PhonePe also exited revenue streams associated with real money gaming due to legislative changes. The enactment of the Promotion and Regulation of Online Gaming Act, 2025 on August 22, 2025, led to the cessation of revenue from advertising and payment gateway services linked to RMG. The RMG segment contributed ₹70 crore in H1 FY26 and ₹245 crore in FY25. 

Read More: PhonePe Secures SEBI Approval for IPO; Walmart, Microsoft to Sell Stake Through OFS Route! 

Overall Revenue Impact 

The combined exit from rent-related payments and RMG has led to a revenue reduction of ₹1,512 crore in FY25. This strategic shift is expected to influence PhonePe’s financial performance as it refocuses on core UPI payments and financial services in preparation for its IPO. 

Conclusion 

PhonePe's pre-IPO adjustments, including the founders' secondary sale and exits from specific revenue streams, highlight significant shifts in its business model. These changes reflect the company's response to regulatory developments and its strategic focus on core services. 

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