Walmart-owned ecommerce giant Flipkart has reportedly given in-principal approval to its online payment subsidiary PhonePe to be setup as a separate entity.
PhonePe will be allowed to set up an independent board and raise fresh funding from external investors. Citing sources, an ET report said that currently, it is not clear how much stake will be sold off by Flipkart, the digital payments company plans to raise up to $1 Bn in external capital.
The report added that Flipkart’s existing investor Tencent, Flipkart cofounder Binny Bansal and some other private equity funds have shown their interest in investing in the payment application.
Related Article: PhonePe In Talks To Raise $1 Bn From Tencent, Tiger Global: Report
PhonePe was founded in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer. It is a mobile payments app which allows users to transfer money instantly from their smartphones by using their unique identification number (Aadhaar), mobile phone number or a virtual payment address. The startup was acquired by Flipkart in 2016.
The payments company has been looking to raise funds. Most recently, PhonePe had raised INR 743.5 Cr ($107.6 Mn) from its Singapore-based parent entity PhonePe Pvt Ltd to bulk up its cash position as it is an official co-sponsor for the TV broadcast of VIVO IPL 2019.
In February, it was also reported that PhonePe is looking to raise fresh funds from private equity (PE) firms KKR & Co, General Atlantic LLC, Tiger Global and Tencent.
PhonePe had also received a tranche of $65.8 Mn (INR 451 Cr) from Flipkart in August 2018. Earlier, Flipkart had also infused $79.6 Mn (INR 549 Cr) in March 2018 and $38.7 Mn (INR 267 Cr) in August 2017.
With PhonePe becoming a separate entity, the competition in the digital payment space is bound to get more tough. Currently, the space is being dominated by Paytm, PhonePe and Google Pay. As of January 2019, Paytm recorded 221 Mn transactions while PhonePe and Google Pay clocked nearly 220 Mn transactions each.
In order to strengthen its footprint in the market, the company also launched its own wealth management unit, PhonePe Wealth Services with an initial authorised capital of $7.12 Mn (INR 50 Cr) and paid up capital of $2.85 Mn (INR 20 Cr).