News18» News»Tech»Flipkart Aims to Attract $700mn Investment for PhonePe as App Clocks 1bn Monthly Transactions
1-MIN READ

Flipkart Aims to Attract $700mn Investment for PhonePe as App Clocks 1bn Monthly Transactions

Image used for representation.

Image used for representation.

Since its acquisition by Flipkart in 2016, PhonePe has crossed the 250 million registered user mark with currently over 100 million monthly active users. Flipkart will continue to remain PhonePe's majority shareholder.

Flipkart has announced that it is partially spinning-off its digital payment firm PhonePe in a bid to fuel its growth. The Walmart-owned Indian e-commerce company shared the development in a company statement today that further notes that the spin-off move will also provide PhonePe with an opportunity to constitute a new board of directors to accelerate its growth in the country. Since its acquisition by Flipkart in 2016, 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. In the latest financing round, PhonePe is raising $700 million, Bengaluru-based Flipkart said in the statement.

Speaking further on the development, Sameer Nigam, founder and CEO at PhonePe, said, "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." Kalyan Krishnamurthy who is the CEO at Flipkart also states that the partial spin-off will help PhonePe to "maximise" its potential into its next phase of development. "It will also maximise value creation for Flipkart and our shareholders," Krishnamurthy added.

Flipkart further adds that the partial spin-off will allow the digital payment company to access dedicated capital to fund its long-term ambitions over the next three to four years. PhonePe will also hope to create a tailor-made equity incentive or ESOP programme for its employees, with the latest development. The funds will be raised at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart, the statement added. Since its a partial spin-off, the Walmart-owned Flipkart will remain PhonePe's majority shareholder, and the two businesses will retain their close collaboration.

Over the last few months, PhonePe added new features in a bid to reach out to more users in India amid the COVID-19 pandemic. Recently, the company onboarded 73 electricity companies (both public and private sector) across 28 states and eight union territories in India to enable users to pay electricity bills seamlessly. Additionally, an NPCI report recently indicated that PhonePe accounted for 40 percent of the total UPI transactions for October 2020.