A couple of weeks ago, PhonePe made an announcement that marked another move in the slow game that the payments company has been quietly and unobtrusively playing. It announced the acquisition of the Mumbai-based WealthDesk, a marketplace for investment bundles, and OpenQ, a registered investment advisory (RIA) firm. Together, the deal cost PhonePe $75 million, according to a report report Bloomberg Walmart-Backed PhonePe Buys Indian Wealth Management Firms Read more by Bloomberg.
The Walmart-owned company’s end game? To become a full-stack financial services platform. It’s been on that road for a while now.
In 2019, it began operating as a distributor for mutual funds. The company lists over 200 funds on its platform, including from asset management companies (AMC) like Nippon, ICICI Prudential, and SBI Mutual Fund. Currently, it also offers users the option to invest in digital gold and silver. It has applied for an NBFC NBFC NBFC Non-banking financial company licence, a stockbroking licence, and most recently, an AMC licence. A spokesperson for PhonePe told The Ken that the firm has received the stockbroking licence from India’s securities regulator, the Securities and Exchange Board of India (Sebi), and is “actively working on launching [its] stock broking services.”
Until the vertical becomes operational, however, mutual funds are PhonePe’s go-to. The WealthDesk-OpenQ acquisition, then, adds another layer to its wealth-management arm.
Operational since 2016, WealthDesk allows users to invest in stock and ETF ETF Exchange-traded funds Exchange-traded funds are funds that trade on exchanges, generally tracking a specific index bundles curated by investment advisors licensed by the Sebi. OpenQ manages 10 investment bundles on WealthDesk. And while Ujjwal Jain, WealthDesk’s chief executive, has maintained that the two operate independently, the two companies have the same address for their office space on their websites. And Jain lists himself as one of OpenQ’s co-founders.
PhonePe’s ambition has its origins in its original business proposition—payments. Or rather the market-share cap that’s looming for those in the space. The National Payments Corporation of India (NPCI) introduced a new rule new rule Moneycontrol Can 30% market share cap on UPI ever be implemented? Read more in 2021, which said that the market share of payments companies shouldn’t exceed 30%. NPCI is the body that owns and operates all retail payments services in India, including UPI.