Flipkart has announced a partial spin-off of digital payments platform PhonePe. Flipkart acquired PhonePe as a mobile payment start-up back in 2016 and launched the services in the same year. After four years, PhonePe has crossed the 250 million registered user users and has over 100 million monthly active users (MAU).
“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,” said the company.
It said that the partial spin-off will also provide PhonePe an opportunity to constitute a new Board of Directors focused on supporting its development, and to create a tailor-made equity incentive or ESOP program for its employees.
In the latest financing round, PhonePe will raise US$700 (Rs. 5,172 crore approx.) million from existing Flipkart investors led by Walmart with post-money valuation US$5.5 billion.
Flipkart confirmed that it will remain PhonePe’s majority shareholder, and the two businesses will retain their close collaboration.
Commenting on the same, Sameer Nigam, Founder and CEO at PhonePe, said:
Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250M 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.
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.