Walmart-backed Flipkart has completed full ownership separation of PhonePe as the payments and financial services unicorn is looking to raise its largest-ever funding round, which will make it the most-valued fintech startup in India.
"Setting up these businesses as separate entities will also provide value and create new opportunities for investors to participate in the Indian tech ecosystem – helping unlock and maximize enterprise value for shareholders of the two companies," the two companies said in a joint statement on December 23.
"As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. This also completes the move to make PhonePe a fully India-domiciled company, a process that started earlier this year," the statement said.
In October, PhonePe moved its registered entity from Singapore to India ahead of its plans to launch an IPO in the country. But a source said moving the domicile to India was also because PhonePe’s many businesses come under the purview of the regulators here.
In an interview for CNN News18’s Bits to Billions in June, PhonePe co-founder and CEO Sameer Nigam had revealed that the company is in the process of moving its registered entity from Singapore to India. He had said that the board had already signed off on the plan and the completion of the process was only a matter of time.
"We are a made-in-India company. Every office, data centre, and employee of ours is here. There is no reason why we should not contribute to wealth creation in this market," Nigam had said.
PhonePe was founded in 2015 by former Flipkart executives Nigam, Rahul Chari and Burzin Engineer, PhonePe. The fintech has over 400 million registered users with leadership in Unified Payments Interface (UPI) transactions. The company has a market share of 47 percent in monthly UPI volumes.
"We are looking forward to the next phase of our growth as we invest in new businesses – like insurance, wealth management, and lending, while also enabling the next wave of growth for UPI payments in India. This will help propel our vision to provide billions of Indians with financial inclusion,” said Nigam.
PhonePe was acquired by Flipkart in 2016. However, Flipkart later hived off PhonePe, partially, as a separate entity, in 2020. PhonePe had then raised $700 million in funding from a clutch of investors, including Walmart, at a valuation of $5.5 billion. Walmart continues to be PhonePe's largest shareholder, the company said in the statement.
“The Flipkart Group has developed many successful entrepreneurs and seen impactful businesses started by former employees. We are proud
to see PhonePe grow and thrive as a successful organization in its own right," said Kalyan Krishnamurthy, CEO of Flipkart Group.
"We are confident PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians. Flipkart
stays committed to its purpose to empower every Indian’s dream by delivering value through innovation in technology and commerce while helping small businesses connect to pan-India markets,” he added.
PhonePe, which over the years, expanded into financial services allowing customers to purchase gold, insurance, and mutual funds on its platform, besides making bill and utility payments, has been in advance talks to raise about $700 million to $1 billion, in a round led by General Atlantic, at a valuation of $12 billion.
Moneycontrol reported on September 5 that PhonePe has begun work to launch its own payment gateway as an extension to its current Quick Response (QR) Code-based UPI payment service and in-app payments.
The company will be competing with the likes of Paytm, Pine Labs and Razorpay as it may look at targeting large offline players as well as small and medium businesses to offer its payment gateway to.
In the past year, PhonePe acquired GigIndia, WealthDesk, OpenQ and closed the long pending acquisition of IndusOS.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
