Rivaling Amazon, Walmart-backed PhonePe to buy two wealth management firms
What's the story
Walmart-owned payments platform PhonePe is set to acquire two investment technology firms WelathDesk and OpenQ for a combined value of $75 million. The move will pit the retail giant against Amazon in India's rapidly expanding money management market. It will buy WealthDesk for $50 million and OpenQ for $25 million. Flipkart owns about 87% of PhonePe, while Flipkart's parent Walmart owns 10%.
Context
Why does this story matter?
India's private wealth management market is expected to grow exponentially in the next few years. By 2025, it is estimated to be worth $1.25 trillion. This has attracted several multinational corporations to set up their own asset management companies in the country. Through PhonePe, global retail giant Walmart is also trying to get a piece of this lucrative pie.
Financial services
PhonePe forayed into financial services in 2017 with 'Gold'
PhonePe's tryst in financial services began in 2017 with 'Gold,' which provided users a convenient option to buy gold. It later ventured into Silver and several insurance products. The company applied to SEBI for a mutual fund license earlier this year, as a precursor to setting up an asset management company. The addition of wealth management companies can be seen as the next step.
Companies
WealthDesk and OpenQ will benefit PhonePe's wealth ecosystem
WealthDesk was founded in 2016 and is headquartered in Mumbai. It is an online wealth management platform that has a unified wealth interface (UWI). The interface enables investors to invest across mobile apps and websites through their broking accounts. OpenQ was founded in 2018 and is an online wealth management platform that designs investment strategies and offers a factor-based equity index.
Rivals
Amazon and Google are already present in wealth management space
With the acquisition of WealthDesk and OpenQ, PhonePe is following in the footsteps of its rivals Amazon and Google. Amazon made its first investment in India's wealth management space by participating in the $40 million funding round of fintech start-up Smallcase Technologies Pvt. Ltd. Google has also joined hands with Indian banks to grant consumer loans online.