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Flipkart announces spin-off of PhonePe

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Flipkart, India’s e-commerce marketplace, on Thursday announced a partial spin-off of PhonePe, one of the country's digital payments platform.

Flipkart announces spin-off of PhonePe
Flipkart, India’s e-commerce marketplace, on Thursday announced a partial spin-off of PhonePe, one of the country's digital payments platform.
According to a statement released by PhonePe, it has crossed the 250 million registered user milestone in just four years since its founding, with over 100 million monthly active users (MAU) generating nearly one billion digital payment transactions in October 2020.
Recognizing the momentum that has been achieved, as well as PhonePe’s significant growth potential, Flipkart’s Board determined that this was the right time to partially spin-off PhonePe so it can access dedicated capital to fund its long-term ambitions over the next three to four years, the digital payment platform said.
"The partial spin-off also provides PhonePe an opportunity to constitute a new Board of Directors focused on supporting its development, and to create a tailor-made equity incentive or ESOP program for its employees," it said.
In this financing round, PhonePe is raising $700 million in primary capital at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart, the statement read.
Flipkart will remain PhonePe’s majority shareholder, and the two businesses will retain their close collaboration.
Speaking on the development, Sameer Nigam, Founder and CEO at PhonePe, said, “This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians.‘’
Kalyan Krishnamurthy, CEO of Flipkart Group, said, “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.”
As per sources, Flipkart will now hold 87 percent in PhonePe, while the remaining 13 percent will be held by its existing investors such as Walmart, Tiger Global and a few others.
With this spin-off, PhonePe will also constitute its own board, and will also give employees its own ESOPs.

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