Employees of Indian e-commerce company Flipkart and its fashion e-commerce arm Myntra will get a cash payout of around $700 million. The payout is a means to compensate eligible current and former employees for the loss in share value after the separation of Flipkart’s digital payments subsidiary PhonePe.
The payout will be facilitated by Walmart, which acquired a majority stake in the e-commerce company in 2018 and is expected to be completed soon. The Human Resources department of the company has sent emails to eligible employees of Flipkart and Myntra, CNBC TV-18 reported citing sources aware of the matter.
While Flipkart has a workforce of over 15,000 employees, Myntra has a workforce of around 2,500-3,500 employees. The cash payout will likely be the last buyback programme by Flipkart ahead of it much-anticipated initial public offering (IPO) in 2023.
Flipkart acquired PhonePe in 2016 for a value of $20 million. PhonePe functioned as Flipkart’s subsidiary till December last year when both firms announced a full separation of ownership. Despite the separation of ownership, Walmart continues to be the parent company of both Flipkart and PhonePe. Walmart will remain the majority sharerholder in both the companies.
Flipkart and PhonePe said in a joint statement: “As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. This completes the move to make PhonePe a fully India domiciled company, a process that started earlier this year. Walmart will remain the majority shareholder of both business groups”.
Flipkart CEO Kalyan Krishnamurthy said that despite its separation from Flipkart, PhonePe will continue to scale and achieve its vision of providing financial inclusion to Indians.
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