Walmart’s Flipkart to partially spin off PhonePe, pours $700m in funding

Walmart-controlled Indian ecommerce firm Flipkart has announced a “partial spin-off” of its digital payments arm PhonePe as it looks to boost its fintech services firm.

Sameer Nigam, founder and CEO of PhonePe

In addition, PhonePe has raised US$700 million in a new round of financing led by Walmart, with the participation of Flipkart’s existing investors, which gave the company a post-money valuation of US$5.5 billion.

“Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250 million users each,” said Sameer Nigam, founder and chief executive at PhonePe.

The partial spin-off also provides PhonePe an opportunity to constitute a new board of directors and to create an equity incentive or an employee stock ownership plan (ESOP) for its employees, the company said in a statement.

The digital payments platform claims to have more than 100 million monthly active users (MAUs) and to has clocked nearly one billion digital payment transactions in October 2020.

Meanwhile, Kalyan Krishnamurthy, CEO of the Flipkart Group, said, “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.”

PhonePe had struggled to raise funds earlier this year – which would have put its valuation at US$3 billion – despite engaging in discussions with investors for several quarters already.

However, the payments firm surpassed its rival Google Pay in terms of its number of transactions in October, giving the company an edge over other competitors.

PhonePe and Google Pay are both competing with Paytm, which is backed by SoftBank and Alibaba.