When Walmart Inc. paid $16 billion for control of India\u2019s e-commerce pioneer Flipkart Online Services Pvt. last year, the American retail giant got a little-noticed digital payments subsidiary as part of the deal. Now the business is emerging as one of the country\u2019s top startups, a surprise benefit for Walmart from its largest-ever acquisition.<\/p>\n\n\n\n
PhonePe which means \u201con the phone\u201d in Hindi and is pronounced \u201cphone pay\u201d has grown into one of India\u2019s leading digital payments companies. Its volume and value of transactions have roughly quadrupled over the past year as the country\u2019s consumers adopt the technology to transfer money digitally to businesses and each other. PhonePe is gaining ground on Paytm, which leads the field and is backed by Warren Buffett.<\/p>\n\n\n\n
PhonePe is an \u201cunderappreciated asset,\u201d Edward Yruma, an analyst from KeyBanc Capital Markets, wrote in a recent research note. He estimated the business may be worth $14 billion to $15 billion, separate from Flipkart\u2019s e-commerce operation.<\/p>\n\n\n\n
Flipkart\u2019s board recently authorized the PhonePe Pvt Ltd. unit to become a new entity and explore raising $1 billion from outside investors at a valuation of as much as $10 billion, according to people familiar with the matter, asking not to be named because the discussions are private. The funding may close in the next couple of months, although the talks are not finalized and terms could still change, they said. The unit would then become independent with a distinct investor base, although Walmart-owned Flipkart would remain a shareholder. Walmart and Flipkart didn\u2019t respond to emails seeking comment.<\/p>\n\n\n\n
The startup was founded in December 2015 by three friends who left Flipkart to get it off the ground. Within a year, Flipkart founders Binny Bansal and Sachin Bansal decided to acquire PhonePe, realizing that solving payments friction would make it easier for consumers to buy online.<\/p>\n\n\n\n
Cheap smartphones and cut-rate wireless data plans have brought millions of Indians online in the years since, boosting the whole industry. In June, the PhonePe app reached 290 million transactions with an aggregate value of $85 billion, compared with 71 million transactions at $22 billion a year earlier, according to the company.<\/p>\n\n\n\n
\u201cGlobally, hardly any privately held fintech company has reached PhonePe\u2019s scale on both sides of the network so rapidly,\u201d Sameer Nigam, PhonePe\u2019s co-founder and chief executive officer, said in a statement, pointing to its 150 million plus customers and more than 5 million merchants. \u201cThat\u2019s why the strong investor interest.\u201d<\/p>\n\n\n\n
Walmart debated for months whether to keep funding the payments business internally or whether to separate the operation so it could raise outside funds. After plowing nearly $300 million into PhonePe, the U.S. retailer opted for the latter course. Alibaba Group Holding Ltd. made a similar decision when it split off its Alipay business, helping growth by allowing it to work with a broader range of merchants.<\/p>\n\n\n\n
Walmart is still grappling with whether to bring in strategic or financial investors, according to one of the people familiar. While a strategic investor would likely be better for growth, senior Walmart executives are concerned that such backers typically want more voting rights, the person said. Walmart wants to use the lessons from PhonePe in other operations around the globe.<\/p>\n\n\n\n
Also unresolved are the future roles for Flipkart\u2019s outside investors. Tiger Global Management and Tencent Holdings Ltd. each hold board seats and equity stakes of about 5%, while Walmart holds about 80%. The board will have to navigate the companies\u2019 varied interests before any deal can be finalized.<\/p>\n","protected":false},"excerpt":{"rendered":"
When Walmart Inc. paid $16 billion for control of India\u2019s e-commerce pioneer Flipkart Online Services Pvt. last year, the American retail giant got a little-noticed digital payments subsidiary as part of the deal. Now the business is emerging as one of the country\u2019s top startups, a surprise benefit for Walmart from its largest-ever acquisition. PhonePe […]<\/p>\n","protected":false},"author":1,"featured_media":65697,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[410],"tags":[],"class_list":["post-65696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/65696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/comments?post=65696"}],"version-history":[{"count":1,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/65696\/revisions"}],"predecessor-version":[{"id":65698,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/65696\/revisions\/65698"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media\/65697"}],"wp:attachment":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media?parent=65696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/categories?post=65696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/tags?post=65696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}