PhonePe’s big digital payments were concealed from the parent firm, Walmart-owned Flipkart Group, and will be priced at $5.5 billion, the company said on Thursday.
However, Flipkart will continue to hold an 87 percent majority stake in the hived-off company PhonePe Private Ltd., with US retail giant Walmart holding a 10 percent stake, and current investors including Tiger Global Management holding the remaining 3 percent
As part of this hive-off, which will be led by Walmart and see participation from current investors, the company is also raising $ 700 million. The funding will likely come in two tranches, with the first due next month.
PhonePe stated that no interest from new investors will be seen in the fundraising.
PhonePe will also select a new board of directors in addition to being an independent firm, which will include company co-founders Sameer Nigam and Rahul Chari, as well as stalwarts from the BFSI and financial technology ecosystem, the company said.
PhonePe’s Employee Stock Ownership Plan (Esop) pool will now be independent of Flipkart as part of this corporate reform, with all workers getting the right to collect PhonePe Esops. Some senior PhonePe employees had earlier obtained stocks of Flipkart.
With over 250 million users each, Flipkart and PhonePe are now among the most influential Indian digital platforms. This partial spin-off provides PhonePe with access to committed long-term capital to achieve our goal of providing a billion Indians with financial inclusion,’ said PhonePe founder and CEO Sameer Nigam.
Sources close to the debate said that this change is consistent with the plans of PhonePe to request an independent initial public offering (IPO). Mint broke the news about the plans for PhonePe to go public by 2023 and become profitable in 2022.
Also, the move signals the vision of PhonePe to be independent of Flipkart and to have external strategic investors funding its development in India and other geographies.
We are optimistic about the prospects of the company as Flipkart Commerce continues to expand strongly to serve the needs of Indian customers. This move will help PhonePe maximise its potential as it moves to the next step of its growth, and will also maximise the development of value for Flipkart and our shareholders,’ said Flipkart Group CEO Kalyan Krishnamurthy.