Bangalore-based e-commerce establishment “Flipkart Private Limited” on Thursday declared a “partial spin-off” of the digital wallet platform and online payment company ‘PhonePe’ to kick-start its new voyage. The company said it has secured 700 million dollars in a new financing round therefore today’s disclosure is significantly a big boost to the confidence the shareholders are showing on the mobile payment application ‘PhonePe’.
According to the people who are aware of the proceedings said the start-up had been engaging with investors or capitalists for new funds for several quarters. Moreover, the company has struggled to raise the funds at an appreciation of $3, earlier this year.
In a statement, the chief executive of PhonePe, Sameer Nigam said “the Flipkart’s stake in PhonePe will reduce from 100 percent to 87% and this partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians”. The statement extended to say that Flipkart will remain PhonePe’s majority shareholder and the “two businesses will retain their close collaboration.
Meanwhile, PhonePe’s new financing round, whose name hasn’t been revealed, was run by Walmart with the involvement of some existing investors and, however, the fresh cycle, which was founded by three employees of Flipkart, gave PhonePe, a post-money appraisal of $5.5 billion.
According to Credit Suisse, India’s mobile payments stake is expected to reach 1 trillion dollars by 2023 and the Phonepe app which allows the users to transfer money instantly has amassed over 100 million monthly active customers and could look to lengthen outside of India, TechCrunch reported.
The Flipkart group’s CEO Kalyan Krishnamurthy has stated that this change will help PhonePe exaggerate its potential or opportunities as it moves to the next phase of its development and it will also increase the value creation for Flipkart and our investors.
Lastly, PhonPe which means “on the phone” in Hindi is a mobile payments application market in India that first introduced the Unified Payment Interface (UPI) which extended into new use cases including travel booking, bill payments, financial services, etc.