Flipkart’s board has decided to partially spin-off PhonePe to help the latter gain access to capital to fund its growth over the coming three to four years.

PhonePe, the digital payments platform of Walmart-controlled Indian e-commerce marketplace Flipkart, seeks to raise $700m in primary capital, at $5.5bn post-money valuation.

The infusion will come from existing investors of Flipkart, led by Walmart. However, Flipkart will continue to remain the majority shareholder.

This will also lead the company to constitute a new board of directors that will focus on creating tailored equity incentives or employee stock ownership plans (ESOP) for employees and support development.

Launched in 2016, PhonePe has 250 million registered users, of which 100 million are monthly active users.

As of October 2020, these active users conducted about one billion digital payment transactions.

Speaking on the development, PhonePe founder and CEO Sameer Nigam said: “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.”

According to Reuters, Nigam previously said that PhonePe is eyeing profitability by 2022 and a public listing in 2023.

Flipkart Group CEO Kalyan Krishnamurthy said: “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 maximise its potential as it moves to the next phase of its development, and it will also maximise value creation for Flipkart and our shareholders.”

Meanwhile, recently, Chinese fintech giant Ant Group refuted plans of divesting its stake in India’s digital payments processor Paytm.