PhonePe Valued At $5.5 Bn In Funding Round After Partial Spin-Off

Indian ecommerce giant Flipkart, on Thursday, announced a partial spin-off of its digital payments company PhonePe, partially selling its stake in the company to Flipkart parent company Walmart. 

PhonePe has raised $700 Mn in primary capital from the divestiture, which will give the company more autonomy over its operations. The divestiture has bumped up PhonePe’s post-money valuation to $5.5 Bn. 

Flipkart will remain PhonePe’s majority shareholder, and the two businesses will retain their close collaboration, according to the announcement. The ecommerce giant said that the partial spin-off would help PhonePe access dedicated capital to fund its long-term ambitions over the next three to four years. 

“As Flipkart commerce continues to grow strongly serving the needs of Indian customers, we are excited at the future prospects of the group. 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,” said Kalyan Krishnamurthy, CEO of Flipkart Group. 

Founded in 2015 by Burzin Engineer, Rahul Chari and Sameer Nigam, PhonePe was acquired by Flipkart in April 2016, nearly five months after the digital payments company had been incorporated. 

PhonePe claims to have more than 250 Mn registered users with over 100 Mn monthly active users (MAU) generating nearly 1 Bn digital payment transactions in October 2020. Among third-party payment apps (TPAPs) on the Unified Payments Interface (UPI) network, PhonePe leads with 42% market share in terms of the total volume of UPI transactions. 

In April this year, PhonePe had received $28 Mn in capital infusion from Flipkart. The fund infusion had come at a time when it had been looking to raise funds to compete in the tight payments industry in India. 

The total infusion till date infusion of Flipkart into PhonePe stands at $928 Mn. PhonePe Singapore is a fully-owned subsidiary of Flipkart Internet, the ecommerce major’s Singapore-based entity.

Meanwhile, Flipkart India Pvt Ltd reported a 12% growth in its revenues for the year ended March 31, 2020, at INR 34,610 Cr, and at the same time, cut its losses by 18% to INR 3,150 Cr.