Amidst the eye-catching discounts on offer during Flipkart’s recently concluded Big Billion Days sale, a curious development went largely unnoticed. PhonePe, the payments company acquired in 2016 by Flipkart, no longer occupied pride of place on the checkout page. Instead, it was just another in a long line of payment options. PhonePe also wasn’t offering the massive cashbacks that it did on previous Big Billion Day sales.

This was a marked change for both companies. Earlier, Walmart-owned Flipkart was PhonePe’s benefactor—both in terms of capital and as a source for users. PhonePe understood this well, taking on Flipkart’s challenges as if they were its own.

The demands of the Big Billion Days sale, for example, extended to PhonePe. “Usually, during the time of the [Big Billion Days] sale, people in PhonePe aren’t allowed to take leaves and work nights just like those in Flipkart. But this time around, Big Billion Days was insignificant for PhonePe,” said an executive associated with the Flipkart Group.

But while few outside the company noticed this new normal, it was the latest and clearest sign yet that three-year-old PhonePe had outgrown its parent, Flipkart. “Three years ago, Flipkart accounted for more than 50% of transactions on PhonePe, but now it is less than 0.5% of the 350 million transactions we do in a month,” said Karthik Raghupathy, PhonePe’s head of strategy and planning.

According to sources, Walmart and Chinese conglomerate Tencent, both investors at Flipkart, are expected to invest $1 billion into PhonePe. This will be at a $9-10 billion post-money valuation, said two sources aware of the matter. This would bring it close to Flipkart, valuation-wise. In 2017, a year before Walmart bought Flipkart Group for $16 billion in the world’s largest e-commerce deal, Flipkart’s valuation was $11.6 billion. It took the Bengaluru-born e-commerce company a decade to get there. PhonePe, which was founded only in 2015, is inching closer to decacorn status—startups valued at $10 billion and over.

And as PhonePe grows into a payments behemoth—with claims of 65 million monthly active users and an annualised $100 billion worth of transactions—reports say it will be hived off into a separate unit. This could mean Walmart and Tencent, along with PhonePe co-founders Sameer Nigam and Rahul Chari, will get to own a piece of PhonePe. So far, those in PhonePe either own Flipkart stock or stock options. A PhonePe spokesperson maintained that news of funding and PhonePe being hived off as a separate entity was speculation. 

PhonePe’s burgeoning potential has been a blessing for Walmart. The company drew the ire of investors with its Flipkart acquisition. But having received not one but two multi-billion-dollar companies through the deal, the upside looks better than it once did. For a large, value-conscious public limited company with a steely-focus on profits, though, this means little without profitability.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.