Flipkart employees who own shares through ESOP will receive a $700 million payout this month. The payout is part of the demerger of Flipkart and PhonePe, a payments company.
To acknowledge PhonePe’s value, Flipkart will provide current and former employees with a single payout. As per media reports, this payout will benefit more than 24,000 employees from Flipkart and Myntra.
An email sent by Flipkart informed employees about the payout, specifying that each vested option would amount to $43.67. For current employees, the payout will encompass both vested and unvested granted options. The compensation is scheduled to be disbursed on or before July 31st.
The Separation of Market Giants
Flipkart acquired PhonePe in 2016 for $20 million, establishing it as a subsidiary. In 2020, PhonePe underwent a partial separation and became a distinct entity. In December 2022, Flipkart and PhonePe announced a complete separation of ownership. The separation allows the majority shareholder, Walmart, to unlock value.
Furthermore, Walmart maintains a stake of approximately 72% in Flipkart and around 85% in PhonePe as of June 2023. The announcement of ownership separation was made jointly by both companies.
Additionally, following the demerger, PhonePe has achieved a significant fundraising milestone. Consequently, securing $1.1 billion from various investors such as TVS Capital Funds and General Atlantic. According to Tracxn, a market research platform, PhonePe was valued at $12 billion as of February 2023.
Moreover, PhonePe holds a significant market share of nearly 50% in UPI payments based on value. PhonePe recently unveiled its entry into Point-of-Sale devices to attract more merchants, thereby expanding its payment business.
PhonePe Prepares for IPO
In 2020, PhonePe underwent a partial separation and became a distinct entity.
It has achieved a significant fundraising milestone following the demerger, securing $1.1 billion from various investors such as TVS Capital Funds and General Atlantic.
PhonePe is currently preparing for an IPO, which led to the complete separation of ownership announced jointly by Flipkart and PhonePe. PhonePe will now be a fully India-domiciled company, completing the process that started earlier this year.
In anticipation of its IPO, PhonePe relocated its registered entity from Singapore to India. The objective is to secure substantial funding, positioning itself as India’s most valued fintech startup.
Both Flipkart and PhonePe released a joint statement outlining the advantages of the ownership separation. By establishing separate entities, it creates value and opportunities for investors. Shareholders of the Singapore entities from both companies acquired shares in PhonePe’s India entity. Walmart will maintain majority ownership in both business groups.
Growth of the Fintech Giant
PhonePe is a prominent top payments app on UPI with over 40% market share. The company expanded into financial services such as gold, insurance, and mutual funds. PhonePe plans to launch its own payment gateway to further enhance its services.
By relocating its registered entity to India, PhonePe aligns with its plan to go public. Moreover, PhonePe’s foray into diverse financial services highlights its diversification strategy. Consequently, the company aims to venture into different segments and optimize its enterprise value.
Acquisitions by PhonePe
The acquisition of the BNPL platform Zestmoney allows PhonePe to enter the lending segment. Media reports suggest that PhonePe aims to become the most valued fintech startup in India.
PhonePe has acquired GigIndia, WealthDesk, OpenQ, and IndusOS as part of its expansion plans. The acquisitions contribute to PhonePe’s goal of creating a super app. PhonePe’s growth aligns with its vision of providing financial inclusion to millions of Indians.
Flipkart CEO Wishes Success to PhonePe
Kalyan Krishnamurthy, CEO of Flipkart Group, is proud to witness PhonePe’s growth and success. Former employees of the company have started impactful businesses, fostering entrepreneurship. Kalyan Krishnamurthy expresses confidence in PhonePe’s scalability and achievements.
Sameer Nigam expressed excitement
Sameer Nigam, Founder and CEO at PhonePe, expresses excitement for future growth and investment. PhonePe aims to expand into insurance, wealth management, lending, and UPI payments. PhonePe’s growth aligns with its vision of providing financial inclusion to millions of Indians.
Sameer Nigam, Rahul Chari, and Burzin Engineer founded the PhonePe Group. PhonePe’s preparation for an IPO prompted the full ownership separation. The transaction ensures direct shareholding in PhonePe’s India entity by the Singapore entity shareholders.