IPO-bound PhonePe concludes separation from Flipkart

Walmart-owned Flipkart and digital payments platform PhonePe, on Friday announced the full ownership separation of PhonePe as the company gears up for its initial public offering (IPO) plans. Walmart will continue to be the majority shareholder of both business groups.

As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India.

The separation from Flipkart makes PhonePe a fully India-domiciled company, a process that started earlier this year. It completed the process of moving its domicile from Singapore to India in October.

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 two companies said in a joint release.

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, they added.

PhonePe plans to go public once its core businesses turn profitable, which the firm hopes to achieve by 2023.

“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,” said Sameer Nigam, founder and chief executive at PhonePe.

Founded in 2015 by Nigam, Rahul Chari and Burzin Engineer, PhonePe forayed into financial services in 2017 and has since introduced several mutual funds and insurance products on the platform.

The company was acquired by the Flipkart Group in 2016. It claims to have more than 400 million registered users as well as 35 million offline merchants spread across Tier 2,3,4 cities and beyond, covering 99% of pin codes in the country.

“PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians. Flipkart stays committed to its purpose to empower every Indian’s dream by delivering value through innovation in technology and commerce while helping small businesses connect to pan-India markets,” said Kalyan Krishnamurthy, chief executive of Flipkart Group.

Meanwhile, PhonePe is looking to raise as much as $1 billion from General Atlantic and existing investors including Tiger Global Management, Qatar Investment Authority and Microsoft Corp. at a valuation close to $13 billion, Bloomberg reported early this month.  

PhonePe’s consolidated operating revenue more than doubled to Rs 1,646 crore during the year ended 31 March 2022. However, its loss widened to Rs 2014 crore from Rs 1728 crore in the previous fiscal.