People with knowledge of the situation claimed that once PhonePe begins its separate from the Flipkart group, the e-commerce company’s current stake will be reflected in the new payments section as part of the separation process. This means that US-based Walmart will have majority ownership in PhonePe, while other Flipkart investors will receive a pro-rata share of the new India entity of the payments company. According to the persons described above, the procedure is presently in progress, and officials at PhonePe hope to formally close it in a month or two. However, they issued a warning that it might take longer due to the complexity of the restructure, which includes tax compliance in Singapore and India.
According to the sources, the mirroring of stockholders in PhonePe would be comparable to how Paytm six years ago created a distinct unit for its e-commerce arm Paytm Mall and went on to seek separate funds for the firm.
The Singapore branch of PhonePe would be liquidated, and Flipkart stockholders would receive the appropriate interests in the Indian branch. According to them, some of the current shareholders may look into partially selling their stake in PhonePe’s India division. One of the aforementioned sources stated, “It’s complicated restructure, but Flipkart shareholders will still get allocations in PhonePe India. “They (PhonePe) intend to raise money and have spoken with potential investors. It is also about unlocking value for Walmart, which at the point of the Flipkart transaction dictated a valuation of about $1 billion.
After the Flipkart board approved a partial hive-off in 2019, PhonePe had an independent board that reported to Walmart. Walmart contributed $700 million to PhonePe later in December 2020, raising its valuation to $5.5 billion. People briefed on the situation claimed that while PhonePe’s restructuring is in progress, the company has been in contact with late-stage financiers for a fresh funding round at a value that is much higher than its previous round. while the discussions are ongoing
PhonePe has stated it is aiming for a valuation of further than $12 billion for those that have not yet been organized into a deal, they claimed.
According to the most recent shareholding information at Tracxn, Walmart, which purchased Flipkart in 2018, owns 72 percent of the Bengaluru-based eCommerce company. Tencent, Tiger Global, and Accel, among the other current investors in the company, are and others. Following the partial split, PhonePe established a new board that includes Binny Bansal, the co-founder of Flipkart, who was instrumental in the company’s acquisition by Flipkart in 2016. Bansal still owns 1.8 percent of the business despite leaving the e-commerce company in 2018. He sold a portion of his stake to Tencent, according to an ET story from a year ago, when Flipkart raised $3.6 billion in funding, valuing the online retailer at $37.6 billion.
One of the aforementioned individuals stated, “Walmart is expected to have a bigger investment in PhonePe India subsidiary as negotiations are underway that certain investors may sell it to them.” Up until Tuesday afternoon, emails forwarded to PhonePe and Flipkart spokespersons went unanswered. The co-founders of PhonePe, Rahul Chari and Sameer Nigam intend to eventually float the business in India. It is currently one of the top competitors to Google Pay in the Unified Payments Interface (UPI) digital payments network. The payments corporation is trying harder than ever to establish itself as a provider of financial services, attempting to market to its current clientele services like asset management and insurance. The corporation claims that it has 380 million registered users overall and over 170 million active users per month. It records around $3 billion in transactions on a monthly average.
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