PhonePe was recently authorised by Flipkart’s board to become a separate entity
Walmart’s 2018 deal to purchase the Indian e-commerce giant Flipkart came with an added bonus, PhonePe Pvt, its then inconspicuous digital payments arm. This once low-key Flipkart subsidiary is now making its way to the front row among the country’s top startups.
PhonePe was recently authorised by Flipkart’s board to become a separate entity. With this, PhonePe can now explore raising $1 billion from an external investors at a $10 billion valuation, reports Bloomberg.
It plans to expand into India's heartland where its rivals haven’t gained ground yet, the report stated.
This would mean that the digital payments company would become an independent entity with a separate investor base. Flipkart, however, would continue to remain a shareholder. The article quotes sources as saying that talks are underway and the deal might be closed in the next few months, although the terms are not yet final.
Edward Yruma, an analyst at investment advisory services provider KeyBanc Capital Markets, said in a recent research note that PhonePe is an 'underappreciated asset'. He said the business may be worth $14-15 billion when considered outside its parent company’s e-commerce operations, the report said.
As per the report, the PhonePe app ticked off 290 million transactions worth $85 billion in June as opposed to last year’s 71 million transactions, with an aggregate value of $22 billion. This growth in the platform’s performance could be attributed to its ever-increasing array of services.Sameer Nigam, co-founder and CEO of PhonePe, cited the payments platform’s over 150 million strong customer base and over five million offline merchants to showcase its fast growth in the digital payments market in India and the strong investor interest in it. “Globally, hardly any privately held fintech company has reached PhonePe’s scale on both sides of the network so rapidly,” the article quotes him as saying.