PhonePe, the digital payments business unit of Flipkart has said it would sell a stake to existing investors for $700 million, helping it fuel expansion at a crowded market that includes Google and Amazon.
PhonePe’s fundraising, from Flipkart investors led by Walmart, will give it a valuation of $5.5 billion, the business said in a statement.
PhonePe can also be using the chance to maintain its independence from the Flipkart Group that runs a prosperous e-commerce business in India rivalling Amazon’s local unit.
It will have its own board of directors, which will include founder and Chief Executive Officer Sameer Nigam and former Flipkart boss Binny Bansal, who’s no longer in the company that he co-founded.
PhonePe will also have employee stock ownership plans different from Flipkart, which will continue to be its majority shareholder, the statement said.
“We are really excited to have access to dedicated long-term capital to further our ambitions in the financial services distribution sector as well as creating large innovative growth platforms for India’s micro, small and medium enterprises,” PhonePe CEO Sameer Nigam said.
PhonePe is eyeing profitability by 2022 and a people record the following year, Nigam has said.
The FinTech platform has more than 100 million monthly active users that helped it clock nearly one billion electronic payment transactions in October.
India’s digital payments marketplace, expected to more than double in size to $135 billion in 2023 from 2019 amounts, has also attracted the likes of Amazon.com and Facebook Inc, which have develop their own systems to woo users.
That accelerated growth in FinTech has pushed India’s flagship payments chip, the National Payments Corp of India (NPCI), to cap the talk of digital transactions some businesses can account for.
The NPCI’s move, announced last month, is expected to hinder the growth of payments services provided by Facebook, Google and PhonePe, while fostering the likes of Reliance’s Jio Payments Bank and Paytm, that have market bank licences.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Sankalp Phartiyal. Editing by Kim Coghill, Mark Potter and Emelia Sithole-Matarise.
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