Bengaluru: Walmart Inc.-controlled Flipkart, which saw its co-founder and group chief executive Binny Bansal resign earlier this week over an investigation into “personal misconduct", may abolish the position of Group CEO and retain the new structure it put in place after Bansal’s exit, said two people aware of the developments.
A key factor driving the decision is the likely spinning-off of Flipkart’s payments arm PhonePe into an independent company, said the people cited above, requesting anonymity. PhonePe will remain majority-owned by Walmart but will raise funds from other investors, the people said. Both Tiger Global Management and Tencent Hodings Ltd, which are shareholders in Flipkart, have expressed interest in funding PhonePe, they said.
PhonePe will seek at least one external investor to secure the large amount of capital it needs to take on Paytm, the person added. Paytm is India’s top digital payments firm.
As part of the new structure, PhonePe co-founder and CEO Sameer Nigam is reporting directly to the board of the Flipkart Group—like Flipkart CEO Kalyan Krishnamurthy.
“PhonePe wants to retain its independence from the group and wants to have the option of raising funds from outside strategic investors. Walmart has given them the green light to do so," said one of the two people cited above.
ALSO READ | What next for Binny Bansal after Flipkart?
Mint had on 1 October first reported that PhonePe may raise funds separately. Mint had also reported that if PhonePe gets more strategic investors outside Walmart, it may look to raise as much as $1 billion next year.
As part of the new structure, Myntra for now will continue to remain independent within the Flipkart Group, but Jabong will be integrated with Myntra, the people mentioned above said. Walmart wants to retain key leaders such as Ananth Narayanan, chief executive of Myntra and Jabong. It is, however, not clear whether Narayanan wants to stay on as CEO, amid intense speculation that he has resigned.
“Ananth and the other senior Myntra leaders will see how the new structure works out over the next few months and then decide whether they want to continue," said the second person cited above.
While Flipkart will do away with the title and position of Group CEO, Krishnamurthy is internally being seen as the de facto head of the entire group, given his new, additional responsibilities of overseeing Myntra and Jabong, the people mentioned above said. With Flipkart’s ties with its founders well and truly severed after Bansal’s dramatic ouster on Tuesday, the e-commerce firm is now almost completely dependent at the senior level on the 46-year-old.
ALSO READ | Walmart puts Amazon on notice amid Flipkart bad news
“The Flipkart Group is committed to the success of Myntra and growing the business, now more than ever. The Myntra team has been doing innovative work to grow the company and create India’s leading online platforms for fashion and lifestyle. We want to empower the Myntra team to continue to operate independently to achieve even greater success," Krishnamurthy said in a statement issued through a spokesperson on Thursday.
ALSO READ | Did Walmart choose to put Flipkart deal over Binny Bansal probe?
Earlier this week, while announcing Bansal’s exit from Flipkart, Walmart said that Bansal had been “contemplating a transition for some time and we have been working together on a succession plan, which has now been accelerated." Mint first reported on 24 September that Flipkart was looking to replace Bansal as Group CEO.