eCommerce major Flipkart has announced that it would be partially spinning off PhonePe in a move that is aimed at widening the digital payments platform's access to capital to fuel its growth. With this, PhonePe would be raising $700 million in primary capital, stated the company.

In a Statement, Flipkart states, "Recognizing the momentum that has been achieved, as well as PhonePe’s significant growth potential, Flipkart’s Board, determined that this was the right time to partially spin-off PhonePe so it can access dedicated capital to fund its long-term ambitions over the next three to four years."

The funds would be raised at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart. Thus, Flipkart would continue to be PhonePe's majority shareholder.

Kalyan Krishnamurthy, CEO of Flipkart Group, comments, “As Flipkart Commerce continues to grow strongly serving the needs of Indian customers, we are excited at the future prospects of the group. This move will help PhonePe maximize its potential as it moves to the next phase of its development, and it will also maximize value creation for Flipkart and our shareholders."

The company has announced that PhonePe has more than 100 million monthly active users which aided it in reaching nearly one billion digital payment transactions in October.

Sameer Nigam, Founder and CEO at PhonePe says, “Flipkart and PhonePe are already among the more prominent Indian digital platforms with over 250 million users each. This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians."