Fintech startup PhonePe on Thursday said it has raised $350 million in funding from General Atlantic, a growth equity firm, at a pre-money valuation of $12 billion.

The investment marks the first tranche of an up to $1 billion total fundraise that commenced in January 2023, the digital payments platform says in a statement.

The funding comes weeks after PhonePe became a fully India-domiciled company. In December 2022, the fintech firm announced its separation from e-commerce major Flipkart. Walmart, however, remains the majority shareholder in both business entities.

PhonePe plans to deploy the new funds to make significant investments in infrastructure, including the development of data centres and help build financial services offerings at scale in the country. The company also plans to invest in new businesses, including insurance, wealth management, and lending.

“We look forward to delivering the next phase of our growth by investing in new business verticals like insurance, wealth management and lending, while also facilitating the next wave of growth for UPI payments in India,” says Sameer Nigam, founder and CEO at PhonePe.

“The fundraise is expected to support PhonePe as it seeks to turbo-charge the next wave of growth for UPI payments in India, including UPI lite and Credit on UPI to enable greater financial inclusion for Indians,” the digital payments startup says.

PhonePe commands around 40% market share of the Unified Payments Interface (UPI) network. The National Payments Corporation of India (NPCI) recently extended the deadline for third-party apps to comply with its 30% market share cap guidelines by two years. The NPCI said the new deadline would be December 31, 2024, from January 1, 2023, earlier.

PhonePe has pursued a clear mission to drive payments digitalisation and significantly broaden access to financial tools for the people of India, says Shantanu Rastogi, managing director and head of India at General Atlantic. The company remains focused on driving adoption of inclusive products developed on the open API based India stack, says Rastogi.

In December last year, PhonePe announced a full separation from the Flipkart Group. After a partial separation from Flipkart in December 2020, a number of Flipkart shareholders, led by Walmart, acquired shares in the recent separation. “This move will allow both companies to chart their own growth paths, build their businesses independently, and help unlock and maximise enterprise value for shareholders of the two companies,” the startup says.

PhonePe claims it has over 400 million registered users, with more than one in four Indians now using the app. Since its launch, PhonePe says it has digitised more than 35 million offline merchants spread across Tier 2, 3, 4 cities and beyond, covering 99% of pin codes in the country.