By P. Sarojini
Mumbai, India (CWBN)_ PhonePe, the digital payments subsidiary of Walmart’s e-commerce unit Flipkart, announced on Thursday that the company is planning to sell a $700 million shares to existing investors, thereby helping it drive expansion in a competitive market that includes Google and Amazon. According to a statement from the company, the fundraising by PhonePe, from Flipkart investors led by Walmart, will provide a $5.5 billion valuation. PhonePe also takes this opportunity to affirm its independence from the Flipkart group which operates a profitable e-commerce company in the country’s competing Amazon’s local unit.
The company’s board of directors include the founder and CEO, Sameer Nigam, and the former Flipkart boss, Binny Bansal, who is no longer with the organization he co-founded. A statement from the company said PhonePe will also have ownership plans for employee shares apart from Flipkart, which will still be the major shareholder. Sameer Nigam, CEO of PhonePe 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”.
Earlier, Nigam has said that PhonePe is aiming profitability by 2022 and a public listing the next year. There are over 100 million monthly active users of the fintech sector that made it reach approximately one billion digital payment transactions in October.
The digital payments industry of the country, which is estimated to more than double in size from 2019 levels to $135 billion in 2023, has also drawn the likes of Amazon.com and Facebook Inc, who have now introduced their own systems to lure customers. The rapid growth of fintech has driven the National Payments Corp of India (NPCI), the flagship payments processor of the country, to cap the share of digital transactions that can be accounted for by certain firms.
The step taken by the NPCI last month is expected to impede the growth of Facebook, Google and PhonePe’s payment systems, while encouraging the likes of Reliance’s Jio Payments Bank and Paytm that have niche bank licenses.
