The digital payment system has been adopted by most of the users in the world. The current pandemic has shown us just what exactly is the value of the digital currency in our lives. PhonePe is a well know digital transaction service provider and is a preferred payment method of many, including me.
Recently the company raised $700 million in a fresh round of funding led by Walmart. Flipkart announced that PhonePe will now be partially spun off into a separate entity. It will get a new Board of Directors and will also have a new shareholding pattern. Flipkart fully owns PhonePe, and now the company is pushing it for a partial spun off with this fundraising.
“This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians,” said Sameer Nigam, founder and CEO of PhonePe. After the fund infusion, PhonePe is now valued at $5.5 billion. Flipkart will continue to remain its majority shareholder, but its stake will now be reduced to 87% from 100%.
According to a joint statement from Flipkart and PhonePe, “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.”
According to sources, Flipkart will also create an Employee Stock Option Plan (ESOP) for its employees. “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.”