$30 bn of proof that tech scene is back

India’s largest startup is ready to birth its own unicorn. That’d be unusual anywhere, but that it’s happening in India offers some hope for the country’s longawaited tech renaissance.

This is also great news for Walmart. The US retail behemoth paid $16 billion for 77 per cent of India ecommerce firm Flipkart Group in May last year. That deal included payments unit PhonePe — an early pioneer in the digitalwallet business — which Flipkart had acquired two years earlier.

Now Walmart is engineering a spinoff as part of a $1 billion funding round that could value payment unit at up to $10 billion and give the retailer an 82 per cent stake in PhonePe and Flipkart, according to reports.

From one $20.8 billion company 18 months ago, India will get two unicorns at a combined value of up to $30 billion.

There are already indications that PhonePe has shed its Flipkart training wheels. From 50 per cent of its transactions three years ago, Flipkart now accounts for just 0.5 per cent, Indian media outlet The Ken reported, citing PhonePe’s head of strategy and planning. During Flipkart’s annual Big Billion Days sale last month, PhonePe’s

◗ Digital-wallet company PhonePe is preparing to spin out of the country’s biggest startup, Flipkart. A renaissance could be afoot.

◗ Paytm, another Indian startup, is on the verge of landing a $2 billion round of funding from investors including Ant Financial, SoftBank Group Corp. and Discovery Capital Management which could give it a $16 billion valuation

◗ An actual IPO of PhonePe will put India back on the global technology map.

logo no longer had top billing on the e-commerce website, according to The Ken. Instead it was listed as just one of the many payment options available to online shoppers.

That PhonePe is preparing to fly solo is also a sign

of India’s maturing digital sector. Not only is the company willing to directly tackle rivals such as Google Pay and WhatsApp payments, but it’s also managing to survive in the scary wilderness beyond the gates of Flipkart. (Survive, of course, is a relative term. It’s likely still burning cash and posting losses, though at least it can keep up with well-funded adversaries, a key measure of success at this point in the game.)

More broadly, the PhonePe spinoff would strengthen the case that a homegrown hero can hold its own when foreign rivals enter.

Paytm, another Indian startup, is on the verge of landing a $2 billion round of funding from investors including Ant Financial, SoftBank Group Corp. and Discovery Capital Management which could give it a $16 billion valuation, Bloomberg News reported this week.

Hopefully the momentum at both PhonePe and Paytm will spur more Indian entrepreneurship, feeding a rebirth in India’s tech sector not seen since the IToutsourcing boom two decades ago.

While that gave us Tata Consultancy Services, Infosys, Wipro. and dozens more, most of those businesses focused on serving foreign needs.

Now, a crop of stars is emerging to meet the needs of India’s 1.3 billion people. It’s not a big step from this spinoff to an actual IPO, a development that will put India back on the global technology map.

—Bloomberg