Separation of PhonePe – Employees of Flipkart and its fashion e-commerce affiliate Myntra will receive a cash compensation of approximately $700 million. The compensation is intended to recompense qualified current and former employees for the share value loss caused by the separation of Flipkart’s digital payments business PhonePe.
Walmart, which acquired a majority share in the e-commerce company in 2018, will enable the transaction, which is scheduled to be finalized soon. The company’s Human Resources department has written letters to eligible Flipkart and Myntra employees, according to CNBC TV-18, citing sources familiar with the situation.
While Flipkart employs over 15,000 people, Myntra employs approximately 2,500-3,500 people. The cash distribution would most likely be Flipkart’s final buyback program before its much-anticipated initial public offering (IPO) in 2023.
Separation of PhonePe
PhonePe was purchased by Flipkart in 2016 for $20 million. PhonePe was Flipkart’s subsidiary until December of last year, when both companies declared a complete split of ownership. Despite the corporate split, Walmart remains the parent firm of both Flipkart and PhonePe. Walmart will retain a majority stake in both enterprises.
“As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India,” Flipkart and PhonePe said in a joint statement. This completes the process that began earlier this year to make PhonePe a 100% Indian-based enterprise. Walmart will continue to be the majority stakeholder in both business groups.”
PhonePe will continue to scale and achieve its objective of giving financial inclusion to Indians, according to Flipkart CEO Kalyan Krishnamurthy, despite its separation from Flipkart.