PhonePe, the crown jewel in Flipkart’s acquisition by Walmart, is “partially” spinning off, the Bangalore-based financial services firm said on Thursday. To kick off its new journey, the firm said it has secured $700 million in a new financing round.
This round, the name of which was not disclosed, was led by Walmart with participation from some existing investors, PhonePe said. The new round gave PhonePe, which was founded by three former Flipkart employees, a post-money valuation of $5.5 billion.
Today’s announcement is a big boost to the confidence investors are showing on PhonePe. The startup had been engaging with investors for new capital for several quarters and, in at least one instance, struggled to raise funds at a $3 billion valuation earlier this year, TechCrunch reported earlier. It had hoped to raise about $1 billion at a valuation as high as $10 billion last year, however, according to people familiar with the matter.
The partial spin-off, which had been in the works for more than a year, means that Flipkart’s stake in PhonePe will reduce from 100% to 87%. “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 chief executive of PhonePe, in a statement.
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