Flipkart’s PhonePe Spun Off, Attracts US$700M Funding from Walmart

As the competition heats up in India’s payments space, Flipkart announces partial spin-off of PhonePe. Flipkart’s majority shareholder Walmart will also be investing for a minority stake in PhonePe.

Indian ecommerce marketplace Flipkart Group has partially spun off its digital payments division PhonePe, the eretail company announced in a statement yesterday.

The company further announced that PhonePe has raised US$700 from U.S.-based multinational retail giant and existing investor Walmart. Walmart is Flipkart’s biggest shareholder, and had invested $16 million for a 77% stake in the company in 2018.

The funding round values the newly spun off payments company at $5.5 billion post-money. This would give Walmart ownership of around 13% of the company. It also makes it the second-most valuable Indian payments company after One97 Communications’ Paytm.

Flipkart will continue to be a majority stakeholder in PhonePe, noting in the statement that “the two businesses will retain their close collaboration.”

The move is directed towards enabling PhonePe to access long-term capital opportunities from external investors, constitute its own Board of Directors focused on the company’s growth, and institute ESOP program for PhonePe employees.

“Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250M users each,” Founder and CEO of PhonePe, Sameer Nigam said in the statement. “This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians.”

PhonePe is battling it out for a share of the UPI payments market

PhonePe is a Unified Payments Interface (UPI) app. UPI is an Indian payments infrastructure that enables interbank transactions via mobile apps.

The 2015-founded payments company currently has over 250 million registered users, and over 100 million monthly active users (MAUs), the statement noted.

To put these numbers in context, its closest Indian competitor Paytm had 350 million users and 140 million MAUs as of 2019. Google Pay is also a contender in the UPI payments landscape in India. Launched in India in 2018, it has 67 million MAUs as of 2020.

And yet, of these three, Google Pay dominates the market. As of May 2020, Google Pay held 38.4% of market share as compared to PhonePe’s 19.8% and Paytm’s 15.1%.

However, in November this year, PhonePe overtook Google Pay to become India’s leading UPI solution by transaction volume. It beat Google Pay by just 15 million transactions, a close margin considering the heated competition in this sector.

WhatsApp and Amazon have also thrown their lots into the UPI payments sector in India, but are still low down on the leaderboard. Amazon is Flipkart’s biggest challenger in the ecommerce space.

“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,” Flipkart Group CEO Kalyan Krishnamurthy said in the statement.

Header image courtesy of PhonePe

SHARE THIS STORY

Share on facebook
Share on twitter
Share on linkedin
Share on email
Sharon Lewis
Sharon is a Staff Writer at Jumpstart

RELATED POSTS

How the Metaverse Will Change the Future of Workspace

How the Metaverse Will Change the Future of Workspace

The metaverse—it’s not a sci-fi concept anymore! People are now working in virtual offices in the metaverse. It is a cloud-based, immersive social environment in which 3D avatars interact with one another. You could be on a beach in Thailand and still be able to attend that important meeting with your colleagues in the metaverse—work can take place wherever you are located.

What Is Over-The-Counter Stock Trading

What Is Over-The-Counter Stock Trading?

If you thought that you could only buy stocks from the stock market, you guessed wrong. Investors can also purchase stocks directly from the companies they wish to invest in. This is called over-the-counter (OTC) trading.

Top 5 Most Valuable Meme Coins of 2022

Top 5 Most Valuable Meme Coins of 2022

Billionaires, including Elon Musk and Mark Cuban, have waxed eloquent about meme coins. These are digital tokens that started as jokes but have since taken off in value. Some even credit meme coins for helping cryptocurrencies, in general, reach a larger audience.

The Butterfly Effect 3 Fascinating Businesses Stories

The Butterfly Effect: 3 Fascinating Businesses Stories

The butterfly effect, a part of chaos theory (a branch of mathematics and mechanics that studies random or unpredictable events in complex systems), is a phenomenon wherein a small or seemingly unrelated event sets in motion the trajectory of something significant. It is fascinating to observe this phenomenon, especially in the dynamic realm of businesses.

How Supercomputers Are Affecting the Environment

How Supercomputers Are Affecting the Environment

Supercomputers may be our glimpse into the future. Renowned computer scientist John von Neumann proposed the term “technological singularity” to describe the point of development at which it is impossible to predict the changes that technology will bring to human civilization.