Online retailer Flipkart Group spun off part of its digital payment arm PhonePe, clearing the unit to raise $700 million to fund fresh developments from a group of existing investors led by US retail giant Walmart.

In addition to allowing it to tap third-party capital, Flipkart explained the move values PhonePe at $5.5 billion, and enables the unit to create its own board of directors focused on its development and offer employees new stock benefits.

Flipkart retains a majority stake of around 87 per cent in PhonePe: it said the companies will continue to work closely together.

Sameer Nigam, PhonePe founder and CEO, said the move provided it with the “dedicated long-term capital” required to achieve a goal of  “providing financial inclusion to a billion Indians”.

In October, PhonePe staked a claim as the top mobile payments provider in India, stating it handled a record 925 million transactions for its more than 250 million registered users.

It faces competition from WhatsApp, which launched a payments service in the country in November, and Google Pay, currently in second place by transaction volume.