Walmart Inc. is looking to spin off Flipkart Online Services Pvt. Ltd.'s payment system and digital wallet unit PhonePe Private Ltd. in a bid to take direct ownership of the business, The Economic Times (India) reported Oct. 11, citing two people familiar with the transaction.
Walmart has reportedly tapped Goldman Sachs to advise the group on the transaction.
The potential move comes as PhonePe kicked off an offering to raise $1 billion in a primary and secondary sale of shares that could lift its valuation to $10 billion, the report said.
Flipkart acquired PhonePe in early 2016, while the U.S. retail giant secured 77% of Flipkart for $16 billion in August 2019.
Following the planned demerger, Walmart would reportedly own about 82% each in PhonePe and Flipkart with a combined valuation of between $27 billion and $30 billion. A potential transaction could also support Walmart's entry into India's digital payment space that is dominated by Alibaba Group Holding Ltd.-backed Ant Financial Services Group and SoftBank Group Corp.-backed Paytm Mobile Solutions Pvt. Ltd., the report said.
In March, the Business Standard reported that Flipkart was preparing to sell PhonePe or pursue a listing of the business in Singapore.
Most recently, a spokesperson for PhonePe told the Economic Times that the company is "not commenting at this stage," while Walmart and Flipkart did not respond to requests for comment.