Flipkart Splits PhonePe In a Separate Unit, Latter to Raise $700 Mn at $5.5 Bn Valuation
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Nearly four years after acquiring PhonePe, Walmart-owned Flipkart has decide to partially spin-off the financial services company in a separate entity.
Flipkart said in a statement that the board has taken this decision to allow PhonePe to access dedicated capital to fund its long-term ambitions over the next three to four years. In line with this, the 5-year-old startup will raise USD 700 million in primary capital, in a round led by Walmart along with participation from some existing investors.
The latest capital infusion will value PhonePe at USD 5.5 billion.
Post the spin-off, Flipkart will continue to be a major stakeholder in PhonePe with 87 per cent stake, as per a report by Bloomberg Quint. “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, PhonePe.
PhonePe started as a mobile payments app and has over the years forayed into financial services. In October, it surpassed Google Pay to record largest UPI transactions on its platform at 835 million.
Commenting on the development, Kalyan Krishnamurthy, CEO, 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.”