Walmart Inc-controlled Flipkart said on Thursday that it was partially spinning off PhonePe into a separate unit. The move is aimed at widening its digital payments platform to access capital for future expansion.
Following the spin-off, Phone Pe will raise $700 million in primary capital, according to a statement issued by Flipkart. The funds will be raised at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart
Sameer Nigam, founder and CEO of PhonePe, said the partial spin-off will give the digital payments business access to dedicated long-term capital, aimed at providing financial inclusion to a billion Indians.
While Flipkart’s ownership in PhonePe will reduce after the spin-off, it will still remain a majority shareholder.
The development comes at a time when digital payments services are becoming ultra-competitive in India. Other major players like GooglePay, Softbank and Alibaba-backed Paytm, WhatsApp Pay and Amazon Pay are also competing hard to get a larger share of India’s vast digital payments market.
PhonePe is one of the leading digital payments companies in India with over 100 million monthly active users. GooglePay has also managed in successfully capturing the market, leading to a drop in Paytm’s share.
