Walmart Inc-controlled Indian e-commerce firm Flipkart said on Thursday it was partially spinning off PhonePe.
The spin-off comes at a time when the digital payments landscape in India has turned extremely competitive, with Google Pay, Paytm, Amazon Pay and WhatsApp Pay vying for a share of transactions.
About Company
PhonePe, which was founded by ex-Flipkart executives Nigam, Rahul Chari and Burzin Engineer, was acquired by Flipkart in 2016.
After two years, in May 2018, Flipkart was acquired by the US retail giant Walmart which led to PhonePe becoming a part of the Walmart stable.
PhonePe has since then been a core part of Walmart’s Flipkart purchase.
Fund Raising Plan
PhonePe, following the spin-off, is raising $700 million in primary capital, in a round led by Walmart with the participation of some existing investors
PhonePe Valuation
After forming the separate legal entity it will value the digital payments business at $5.5 billion.
Flipkart Ownership
The spin-off, in the works for more than a year, will reduce Flipkart’s ownership in PhonePe from 100% to about 87%, reported by Bloomberg Quint.
Comment from Flipkart
“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.”
Comment from Phone Pe
Sameer Nigam, founder and chief executive officer “This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians.”
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