Flipkart and PhonePe have announced their separation six years after the e-commerce giant acquired the latter, according to a joint statement released on Friday. PhonePe is now a wholly India-domiciled firm following the conclusion of the separation.
In October, PhonePe relocated its registered office from Singapore to 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 companies said.
According to Bloomberg, the split comes at a time when PhonePe is in talks to seek capital at a valuation of close to $13 billion. If it succeeds, it will be India’s most valuable fintech startup. In 2020, the firm raised $700 million from Walmart and existing investors, including Tiger Global, at a valuation of $5.5 billion.
While media reports earlier suggested that PhonePe was planning an IPO, the company’s founder and CEO Sameer Nigam in June 2022 dismissed the reports, saying, “PhonePe is not planning an IPO right now. We are focusing on building our business, and will go public once our core businesses turn profitable and our new initiatives have achieved a good product-market fit and scale,” according to a PTI report.
The existing shareholders of Flipkart Singapore and PhonePe Singapore, led by Walmart, have taken up equity directly in PhonePe India as part of the split of the two companies.
Walmart will continue to be the largest stakeholder of PhonePe and Flipkart.
“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 in the statement.
While the e-commerce giant is presently valued at $37.6 billion following a $3.6 billion financing in 2021, it was reportedly eyeing a $60-70 billion valuation for its planned IPO in the United States in 2023.
According to data from the National Payments Corporation of India, PhonePe presently has over 400 million UPI users in the country, with a 46% market share in terms of payment volumes and a 49% market share in terms of payment values as of November (NPCI).
Aside from that, the company has 35 million merchants spanning 99% of the country’s pincodes. It also boasts 1.1 million sellers on its site, which includes small and medium-sized enterprises as well as artisans and craftspeople.