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Walmart Inc-controlled Indian e-commerce firm Flipkart said on Thursday it was partially spinning off PhonePe in a move aimed at widening the digital payments platform's access to capital to fuel its growth. PhonePe will raise $700 million in primary capital, Bengaluru-based Flipkart said in a statement.

"Recognizing the momentum that has been achieved, as well as PhonePe’s significant growth potential, Flipkart’s Board determined that this was the right time to partially spin-off PhonePe so it can access dedicated capital to fund its long-term ambitions over the next three to four years," Flipkart said.

The funds will be raised at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart, the statement said. Flipkart will continue to be PhonePe's majority shareholder.

Also read: India’s quest to fix its payments puzzle

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," said Sameer Nigam, Founder and CEO at PhonePe.

Flipkart said PhonePe has more than 100 million monthly active users which helped it clock nearly one billion digital payment transactions in October.

Kalyan Krishnamurthy, CEO of Flipkart Group, said, “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."


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