Flipkart owned digital payments platform, PhonePe has got in-principle approval from Flipkart to hive-off its business from its parent organisation. Flipkart has a 100% share holding in PhonePe.
The hive-off plan if successful will set the stage for an independent board and fresh investment from external investors. Although, as of now its not clear how Walmart backed Flipkart will de-merge its business with PhonePe but as per some people in know of the developments Flipkart is looking for external funding of about $1 billion.
Also, gaming giant Tencent which is an investor in Flipkart and its co-founder Binny Bansal is willing to invest in PhoenPe.
“PhonePe has held talks to raise $1 billion and has been scouting the market for a while now.But now with the Flipkart board giving it a nod to become independent, the actual process of fund-raise will start. They are fighting a player like Paytm, which has the backing of SoftBank, therefore they need huge sums of capital to compete,” PhonePe insiders said.
PhonePe which was acquired by Flipkart in 2016, was founded by ex-Flipkart executives Sameer Nigam, Rahul Chari and Burzin Engineer. Since then Flipkart has invested about $500 million in PhonePe.
Read Also:Paytm leaves PhonePe and Google Pay behind, records highest UPI transactions
Turning it into a separate entity will make the rapidly expanding digital payments ecosystem in the country more competitive. The battle to become the market leader is getting fierce day by day. The other two digital payment platforms, Google Pay and Paytm are backed by big companies like Google and Paytm and have lots of fund as well as resources and now PhonePe seems to be running in that race too.
Read also: Walmart invests ₹743 crore in digital payments subsidiary PhonePe