Bengaluru, Dec 3 (IANS): E-commerce marketplace Flipkart on Thursday announced a partial spin-off of digital payments platform PhonePe in a bid to help it access dedicated, long-term capital to fund its growth ambitions over the next three to four years.

Flipkart said that PhonePe is raising $700 million in primary capital at a post-money valuation of $5.5 billion from existing Flipkart investors led by Walmart.

The e-commerce marketplace will remain PhonePe's majority shareholder.

"This partial spin-off gives PhonePe access to dedicated long-term capital to pursue our vision of providing financial inclusion to a billion Indians," Sameer Nigam, Founder and CEO at PhonePe, said in a statement.

The partial spin-off also provides PhonePe an opportunity to constitute a new Board of Directors focused on supporting its development, and to create a tailor-made equity incentive or ESOP programme for its employees.

"As Flipkart Commerce continues to grow strongly serving the needs of Indian customers, we are excited at the future prospects of the group," said Kalyan Krishnamurthy, CEO of Flipkart Group.

"This move will help PhonePe maximize its potential as it moves to the next phase of its development, and it will also maximize value creation for Flipkart and our shareholders."

PhonePe, which competes against other digital payments platforms such as Google Pay and Paytm, has crossed 250 million registered user milestone, with over 100 million monthly active users (MAU) generating nearly one billion digital payment transactions in October 2020, the company said.