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PhonePe separates from Flipkart

The payment gateway formerly acquired by flipkart 2016 has officially completely seperated from the e commerce site on 23 Dec, 2022.

What is happening: Indian e-commerce giant Flipkart no longer owns a stake in payments firm PhonePe.

  • The two have completed a full ownership separation of PhonePe and shareholders in the Singapore entities of both firms which have purchased shares directly in PhonePe’s India entity.

Backdrop: The move comes as PhonePe, which was acquired by Flipkart in 2016, moves its entire base to India.

  • Despite the move, Walmart remains the majority shareholder in both firms.

Numbers: During late 2020, PhonePe announced its intention to become a separate entity.

  • Needless to say, the separation will have some impact on Flipkart’s valuation.

  • PhonePe, which leads the mobile payments market in India, was valued at $5.5 billion in a funding round it unveiled in late 2020.

  • The payments startup is in talks to raise as much as $1.5 billion at a pre-money valuation of $12 billion and use some of the proceedings to buy back certain shares.

What is being said: In a recent filing, Walmart has about this seperation stated that-

  • "As a result of the separation of the businesses, the Company anticipates recording reorganization expenses which include various income and other taxes, as well as employee compensation and transaction expenses. These reorganization expenses are non-core expenses and will be treated as an adjustment to earnings per share when the Company reports its results for the fourth quarter of its fiscal year ending January 31, 2023,”

Summary: One of India's largest payment gateway, PhonePe has seperated itself from Flipkart in its move to become a seperate entity.


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