Walmart set to hive off PhonePe from Flipkart

Within seven months of receiving in-principle approval from parent company Flipkart's board to hive off as a separate entity, digital payment platform PhonePe is likely to become an independent entity under a self-governing board soon.

According to an ET report, Walmart is planning to demerge PhonePe so that the US-based retail giant will entirely hold its ownership.

The proposed spinning-off plan is happening at a time when PhonePe is eyeing to corner a mega-round through a primary and secondary sale of shares. In a recent report by American multinational investment bank and financial services company, Morgan Stanley, PhonePe was valued at about $7 billion.

On the other hand, industry experts expect that it will raise the next round at over $10 billion valuation.

In both scenario, if Walmart's plan to demerge PhonePe goes through, several existing investors in Flipkart will make a killing via secondary sale.

Moreover, Walmart will be listing both entities separately. At the time of $16 billion acquisition deal, the Bentonville-based company had revealed its plan to go for Flipkart IPO in the next four years.

PhonePe operating as an independent entity with a different set of board members, investors, as well as to raise a fresh round, will catapult the firm in the next phase of the competition where heavyweights and arch-rivals Google Pay and Paytm have already made a dent.

In terms of growth, PhonePe, which was behind in UPI-based transactions, has become a leader with over 37% marketshare. Besides peer-to-peer (P2P) payments, PhonePe has not left any stone unturned to tap UPI-based merchant aka P2M payments.

The Sameer Nigam-led firm is also offering wealth management and third party insurance products to fight against growing competitors - Paytm and Mobikwik.