Flipkart’s PhonePe To Become A Separate Entity, To Raise $700 Million Post Spin-Off

According to a statement issued by Flipkart, PhonePe following the spin-off is expected to raise $700 million in primary capital. The funds will be raised at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart.

New Delhi: India’s leading e-commerce website and Walmart Inc led Flipkart on Thursday, said that it will partially off-shoot its digital payments arm PhonePe into a separate entity. The move of creating a separate entity is aimed to widen the capital access for future expansion of the digital platform.



According to a statement issued by Flipkart, PhonePe following the spin-off is expected to raise $700 million in primary capital. 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 Chief Executive Officer (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.

Post-spin-off, Flipkart’s ownership will reduce in PhonePe, but the e-commerce giant will continue to remain as a majority stakeholder.

The off-shooting of PhonePe into a separate entity comes into play when the digital payments industry in India, has turned into an ultra-competitive market. Players like Google Pay, recently launched WhatsApp Pay, Alibaba and Softbank backed Paytm and Amazon pay are fighting hard to get a larger share of the digital payments market in India.

PhonePe in India is one of the leading digital payments companies, with a user base of 100 million monthly active users. Google Pay with its user-friendly interface, has also managed to get a larger chunk of the market, leaving Paytm behind in the race, leading to a drop in the share prices of the digital payment service provider.

PhonePe was founded in December 2015, by Sameer Nigam, Rahul Chari, and Burzin Engineer, Bangalore based techies. The mobile application, based on the Unified Payments Interface (UPI), went live in August 2016. In April 2016, the digital payments service was acquired by Flipkart, and Sameer Nigam was made the CEO.



Within three months of launch, the app was downloaded by over 10 million users. In 2018, PhonePe also became the fastest Indian payment app to get a 50 million badge on the Google play store.