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    Walmart-backed PhonePe set to acquire WealthDesk, OpenQ for $75 million

    Synopsis

    PhonePe, which had also applied for a mutual fund license with the Securities and Exchange Board of India (Sebi) last December, will acquire WealthDesk at a deal value of $50 million, while OpenQ deal is pegged at $25 million, sources said.

    phonepeAgencies
    Bengaluru: PhonePe, part of the Walmart Inc-controlled Flipkart group, is acquiring two investment technology platforms – WealthDesk and OpenQ– for a total enterprise value of $75 million, two people aware of the discussions confirmed to ET.

    Both the acquisition deals will be a mix of cash and stock, according to a person in the know.

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    PhonePe, which had also applied for a mutual fund license with the Securities and Exchange Board of India (Sebi) last December, will acquire WealthDesk at a deal value of $50 million, while OpenQ deal is pegged at $25 million, sources said.

    The acquisitions are a part of PhonePe’s larger game plan to open new revenue streams and diversify its offerings for users of its payment services, at a time when revenue from unified payments interface (UPI) continues to dwindle under the government’s zero merchant discount rates (MDR) regime.

    MDR is a part of the transaction fee which banks and fintechs charge for providing the payments service.

    At present, PhonePe holds a mutual fund distribution license, and will be adding stocks and exchange traded funds (ETFs) to its growing list of wealth management products.

    PhonePe confirmed the development to ET on Wednesday morning but declined to comment on the contours of the deal.

    "PhonePe is acquiring WealthDesk. The founder and the entire team will be working as a part of the PhonePe group and both the platforms will remain independent,” a representative for the company said, noting that WealthDesk will continue to remain an open platform for all players, and that founder Ujjwal Jain will continue defining the vision for his company."

    The Bengaluru-based company also confirmed the acquisition of OpenQ (“Quantech Capital Investment Advisors Private Limited”), subject to necessary regulatory approvals.

    “Post-acquisition, OpenQ will be instrumental in creating the wealth ecosystem for the PhonePe Group," the company said. The OpenQ team will integrate with PhonePe's wealth management team.

    In an earlier interaction with the media, last year, company cofounder and chief executive, Sameer Nigam had said that he expects close to 40%-45% of PhonePe's overall revenues to come from financial services. The company also had plans to enter the merchant-lending business in the first half of 2022.

    Founded in 2016, WealthDesk is an investment technology platform that covers the entire asset management and advisory value chain from portfolio creation on top of equities and ETFs, to creating investment products called WealthBaskets for retail investors. It also enables large scale distribution through broking partners.

    While, four-year old OpenQ also offers retail and institutional investors with thematic-based investments, trading baskets investment analytics services, among other offerings.

    Newswire Bloomberg first reported the acquisitions on Tuesday.

    Increasingly, several other mainstream Indian fintechs have been looking to diversify their offerings into the wealth management space.

    Even Bengaluru-based credit card bill payment platform Cred, which is in midst of a new fund raise, was in talks to acquire Amazon-backed investment platform, Smallcase, which allows users to invest in model portfolios of stocks, ETFs and real estate investment trusts.

    On Wednesday, New-Delhi based merchant fintech, BharatPe also announced the launch of an investment platform for its merchant partners. Through the platform, BharatPe looked to provide merchants an option to invest in fixed deposits by Unity Small Finance Bank, which is jointly established by the Centrum Financial Services and Resilient Innovations, parent of BharatPe, to carry on small finance bank business in India.
    The Economic Times

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