Phone Pe will raise $700 million in primary capital following the spin-off. The funds will be raised from existing Flipkart investors, led by Walmart, at a post-money valuation of $5.5 billion. maybe similar to Flipkart’s post-separation.

Flipkart, which is controlled by Walmart Inc, announced on Thursday that it was partially spinning off PhonePe into a separate unit. The move is intended to broaden its digital payments platform in order to gain access to capital for future growth.

According to a Flipkart statement, Phone Pe will raise $700 million in primary capital following the spin-off. The funds will be raised from existing Flipkart investors, led by Walmart, at a post-money valuation of $5.5 billion.

PhonePe founder and CEO Sameer Nigam stated that the partial spin-off will provide the digital payments business with dedicated long-term capital, with the goal of providing financial inclusion to a billion Indians.

While Flipkart’s stake in PhonePe will be reduced following the spin-off, it will still be the majority shareholder.

The development comes at a time when digital payment services in India are becoming extremely competitive. Other major players, such as GooglePay, Softbank and Alibaba-backed Paytm, WhatsApp Pay, and Amazon Pay, are also vying for a larger share of India’s massive digital payments market.

With over 100 million monthly active users, PhonePe is one of India’s leading digital payment companies. GooglePay has also successfully captured the market, causing Paytm’s market share to fall.