Flipkart and PhonePe complete separation six years after acquisition

• Flipkart and PhonePe have announced that they are fully separated now, six years after the e-commerce giant acquired the latter.
  
• The separation comes at a time when PhonePe is reportedly in talks to raise funds at a valuation of close to $13 billion.
  
• Walmart will continue to be the largest shareholder of PhonePe and Flipkart, according to a joint statement by the companies.
  

Flipkart and PhonePe have announced that they are fully separated now, six years after the e-commerce giant acquired the latter, the companies said in a joint statement on Friday. Post the completion of the separation, PhonePe is now a fully India-domiciled company.

To recall, PhonePe moved its registered office from Singapore to India in October.

“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.

The separation comes at a time when PhonePe is in talks to raise funds at a valuation of close to $13 billion, according to a Bloomberg report. If it succeeds, it would become the most-valued fintech startup in India. The company had raised $700 million in 2020, led by 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.

As part of the separation of the two companies, the existing shareholders of Flipkart Singapore and PhonePe Singapore, led by Walmart, have taken up equity directly in PhonePe India.

Walmart will continue to be the largest shareholder of PhonePe and Flipkart, according to the statement.

“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.

The separation of Flipkart and PhonePe could also have an impact on the former’s valuation – while the e-commerce giant is currently valued at $37.6 billion after a fundraise of $3.6 billion in 2021, it was reportedly seeking a $60-70 billion valuation for its planned IPO in the US in 2023.

PhonePe is the current market leader in UPI payments in the country

PhonePe currently has over 400 million UPI users in the country, with a 46% market share in terms of payment volumes and a 49% share in terms of payment values, as of November, according to data from the National Payments Corporation of India (NPCI).

Apart from this, the company also has 35 million merchants covering 99% of the pincodes in the country. It also has 1.1 million sellers on its platform, including small and medium businesses, artisans and craftsmen.

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