The two companies said that establishing businesses as individual entities would allow both to chart their own growth paths.
As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. This completes the move to make PhonePe a fully India-domiciled company, a process that started earlier this year.
Walmart will remain the majority shareholder in both business groups.
In October, PhonePe, which was earlier domiciled in Singapore, said that it had
completed the process of moving base to India. The company had moved all the businesses and subsidiaries of PhonePe Singapore to PhonePe Pvt Ltd – India directly, including its insurance broking services and wealth broking businesses, it said in a statement.
PhonePe’s board had also approved the creation of a new employee stock options pool (Esop) and the migration of more than 3,000 PhonePe Group employees’ existing Esops by issuing new Esops under PhonePe India’s new plan, the digital payments company had said in October.
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The hive-off process had started back in 2020, when PhonePe raised primary capital of $700 million led by Flipkart-parent Walmart, at a valuation of $5.5 billion.
The news also comes at a time when PhonePe is looking to close a funding round of $1.5-2 billion and continues to hold talks with the likes of private equity firm General Atlantic as well as existing investor Tiger Global Management. ET reported last month saying
Flipkart may also opt for a $700 million Esop buyback as part of PhonePe’s new funding round.
“Flipkart and PhonePe are proud, homegrown Indian brands with a user base upwards of 400 million each. 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,” Sameer Nigam, founder and chief executive officer (CEO) of PhonePe, said on Friday.
Setting up these businesses as separate entities would also provide value and create new opportunities for investors to participate in the Indian tech ecosystem — helping unlock and maximise enterprise value for shareholders of the two companies, both entities said in a joint 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. We are confident PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians,” said Kalyan Krishnamurthy, CEO of Flipkart Group.