On Thursday, Flipkart, owned by US-retailer Walmart, said it is partially spinning off PhonePe in order to broaden its digital payments platform's accessibility to capital for boosting its growth prospects. The company said PhonePe will mop up a sum of $700 million in primary capital.
"Recognizing the momentum that has been achieved, as well as PhonePe's significant growth potential, Flipkart's Board determined that this was the right time to partially spin-off PhonePe so it can access dedicated capital to fund its long-term ambitions over the next three to four years," Flipkart said.
The funds will be amassed at a post money valuation of $5.5 bn from existing investors of Flipkart. However, Flipkart will continue to be PhonePe's major stakeholder.
"Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250 million users each. This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians," said Sameer Nigam, Founder and CEO at PhonePe.
Kalyan Krishnamurthy, CEO of Flipkart Group, said, "As Flipkart Commerce continues to grow strongly serving the needs of Indian customers, we are excited at the future prospects of the group. This move will help PhonePe maximize its potential as it moves to the next phase of its development, and it will also maximize value creation for Flipkart and our shareholders."