Bengaluru, 3rd Dec. 2020– Walmart owned eCommerce platform Flipkart separated its payment unit PhonePe, as the digital payment firm raises $700 million in funding valued at USD 5.5 billion.
The financing round was led by Walmart including existing Flipkart investors, a statement said.
Flipkart will remain PhonePe’s majority shareholder, and the two businesses will retain their close collaboration, it added.
“Recognising 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,” the statement said.
PhonePe has crossed the 250 million registered user milestone, with over 100 million monthly active users (MAU) generating nearly one billion digital payment transactions in October 2020.
“Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250 million 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,” PhonePe founder and CEO Sameer Nigam said.
Kalyan Krishnamurthy, CEO of Flipkart Group, said, “the 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 was founded by ex-Flipkart executives Nigam, Rahul Chari, and Burzin Engineer, and was acquired by Flipkart in 2016. In 2018, Flipkart was acquired by Walmart, and PhonePe was part of the transaction as well.
Walmart had announced a 1.3 percent increase in net sales in its international business at USD 29.6 billion in the third quarter ended October 31. It attributed this growth to various factors including strong results of Flipkart and PhonePe that saw “all-time high” monthly active users.
During the earnings call last month, Walmart President, CEO and Director C Douglas McMillon noted the strong performance of its India units. “In India, Flipkart and PhonePe had strong results for the quarter. The number of monthly active customers for these platforms is at an all-time high,” he had said.
Discussions for hiving off PhonePe which competes with players like Paytm, Google Pay, Amazon Pay, and others have been going on for almost a year.