Industry

Flipkart to hive off PhonePe

The logo of e-commerce firm Flipkart. File   | Photo Credit: REUTERS

Flipkart on Thursday announced a “partial spin-off” of PhonePe to help the digital payments platform access dedicated, long-term capital to fund its growth ambitions. Flipkart, however, will remain the PhonePe’s majority shareholder.

The company will also be raising $700 million in primary capital at a post-money valuation of $5.5 billion. The funding comes from existing Flipkart investors, led by Walmart.

In the last four years, since PhonePe was founded, it has garnered over 250 million registered users with over 100 million monthly active users, generating nearly one billion digital payment transactions in October 2020.

“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,” the company said in a statement.

The partial spin-off, it added, also provides PhonePe an opportunity to constitute a new Board of Directors focused on supporting its development, and to create a tailor-made equity incentive or ESOP program for its employees.

Flipkart will remain PhonePe’s majority shareholder, and the two businesses will retain their close collaboration, it added.

“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,” Sameer Nigam, Founder and CEO at PhonePe, said.

Meanwhile, Kalyan Krishnamurthy, CEO of 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.

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Printable version | Jan 19, 2021 9:46:44 PM | https://www.thehindu.com/business/Industry/flipkart-to-hive-off-phonepe/article33238033.ece

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