Walmart Inc-controlled Indian e-commerce firm Flipkart said on Thursday it was partially spinning off PhonePe to widen the digital payments platform’s access to capital to fuel its growth.

PhonePe, which competes with Alibaba-backed home-grown payments pioneer Paytm and Google Pay, will raise $700 million in primary capital, Bengaluru-based Flipkart said in a statement.

The money will be raised from existing Flipkart investors led by Walmart, giving PhonePe a valuation of $5.5 billion including the fundraising, the statement said.

Flipkart will continue to be PhonePe’s majority shareholder, it added.

 

“We are really excited to have access to dedicated long-term capital to further our ambitions in the financial services distribution sector as well as creating large innovative growth platforms for India’s micro, small and medium enterprises,” PhonePe CEO Sameer Nigam said.

PhonePe is eyeing profitability by 2022 and a public listing the following year, Nigam has previously said.

The fintech firm has more than 100 million monthly active users which helped it clock nearly one billion digital payment transactions in October.

 

India’s digital payments market, expected to more than double in size to $135 billion in 2023 from 2019 levels, has also attracted the likes of Amazon.com and Facebook Inc , which have come up with their own systems to woo users.

That rapid growth in fintech has driven India’s flagship payments processor, the National Payments Corp of India (NPCI), to cap the share of digital transactions some companies can account for.

The NPCI’s move, announced last month, is expected to hinder the growth of payments services offered by Facebook, Google and PhonePe, while boosting the likes of Reliance’s Jio Payments Bank and Paytm, which have niche bank licences.