PhonePe: liquidity, delayed by geography

The situation

Like many India-focused tech companies of its generation, PhonePe was legally domiciled in Singapore — a jurisdiction long favored for its investor-friendly tax and listing regime, even when nearly all of the underlying business happened in India. In October 2022, PhonePe reversed that structure, moving its domicile from Singapore back to India ahead of separating fully from parent company Flipkart.

How the deal worked

Redomiciling wasn't free. Because the shift effectively meant investors sold their stake in the Singapore entity and re-invested in the new Indian entity, it triggered a capital gains tax bill — reported at roughly ₹8,000 crore (about $943 million) — that fell mostly on majority owner Walmart. On top of the tax bill, PhonePe's roughly 3,000+ employees holding ESOPs in the old Singapore plan had their options migrated to a new India-based plan, which under Indian law meant restarting a one-year vesting cliff on options many had already substantially vested.

It took until 2025 — with an IPO filing approaching — for employees to see a company-organized liquidity event: an ESOP buyback reported at roughly ₹700-800 crore, open to over 1,000 eligible employees. PhonePe has said it is targeting an IPO on Indian exchanges aiming to raise around $1.5 billion.

The outcome

The domicile shift cost investors real money years before it produced any employee liquidity — and the employees whose options were migrated effectively had their liquidity timeline reset alongside their vesting clock. The 2025 buyback was the first tangible cash event for many of them since that reset.

What it teaches

Where a company is legally domiciled isn't just a tax or listing-venue detail — it can directly delay and complicate employee liquidity, independent of how well the underlying business is performing. A secondary buyer or an employee evaluating an offer should ask not just "what's the valuation" but "what corporate structure sits between me and an actual cash payment."