PhonePe CEO Sameer Nigam on Wednesday said that the regulator's UPI market share cap is certainly an overhang on the fintech's plans for an initial public offering.
Nigam, speaking at the Global Fintech Fest 2024, said he's "nervous about going public when there's a 30% market cap lurking." Current NPCI regulations require that no single UPI platform can have a market share larger than 30% by December 2024.
This would mean that the likes of market leaders PhonePe and Google Pay will have to reduce their share. PhonePe currently dominates, constituting over 48% of all UPI transactions. Google Pay stands at about 37%, according to the latest NPCI data.
Nigam said that while raising money could be possible, his concern "is to do right by shareholders."
"I don't want to go public based on today's numbers and market share," he added.
Nigam said that the startup ecosystem is not traditionally used to operating in regulated space. "Today, regulators and startups both don't know which tech-enabled solutions are aspirational and which are not good at scale. For example, if AI is used for a new credit scoring system, lots could get access to credit but some could be frozen out permanently," he said.
Nigam said that today, a new feature or app can reach the masses very quickly and the regulator's window to act on it is very narrow.
"But if startups worry about compliance too much, they may not take off. If startups run too fast, they will crash and burn," he quipped, adding that it is a balancing act.
Speaking to NDTV Profit, Nigam added that PhonePe is on the right track directionally in terms of heading towards full profitability.
"Over the years, we've moved to contribution positive margin to adjusted Ebitda from FY22 to FY23. Now, FY24 was adjusted PAT level profitable. We should keep closing the gap to profits. I don't want to do crystal-ball gazing for FY25, but we're right directionally," he said.
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