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Bengaluru, December 23
Walmart-owned Flipkart and PhonePe have announced the full ownership separation of PhonePe, a digital payments platform. This completes the move to make PhonePe a fully India-domiciled company, a process that started earlier this year.
As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. “Establishing these businesses as individual entities will allow both to chart their own growth paths, as they continue building industry-leading offerings that provide access and inclusion for Indians,” the company said in a statement.
One time payout
Following the separation, employees of the e-commerce major who hold Flipkart ESOPs are being offered one-time cash payout, according to an internal email sent by Flipkart CEO Kalyan Krishnamurthy. businessline has seen a copy of the email.
The new share price of Flipkart has been determined at $165.83 per options (previously $189.1), excluding the value of PhonePe. The payout to employees will, however, be at $43.67 per options, reflecting the increase in the market valuation of PhonePe. According to a source close to the development, the total cash payout will be around $700 million.
“This payout represents the value of the PhonePe holding within those Flipkart options. It will present an event for wealth creation for our employees that has been a continued commitment for Flipkart, and one that we will remain focused on. It is truly a testimony to the hard work of thousands of Flipkart and PhonePe employees,” Krishnamurthy added.
Raising $1 m
Digital payments major PhonePe is in talks to raise a $1 billion funding round led by General Atlantic, according to another source close to the development. This round is expected to close in the next 2-3 weeks and could value the company at $12 billion (pre-money). This would make PhonePe, the most valued fintech company.
PhonePe and Flipkart did not comment on the cash payout and PhonePe’s valuation.
Commenting on the separation, Sameer Nigam, Founder and CEO, PhonePe said, “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.”
Kalyan Krishnamurthy, CEO of Flipkart Group said, “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 organisation in its own right.”
Started in 2007, the Flipkart Group today has a footprint in several industries including e-commerce marketplace Flipkart.com, Myntra, Cleartrip, Flipkart Health+, and more. The PhonePe Group was acquired by the Flipkart Group in 2016. The digital payments company has over 400 million registered users and has digitized more than 35 million offline merchants spread across tier-2, -3, -4 cities, and beyond.
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