Bengaluru-based e-commerce major Flipkart said Thursday it will partially hive off its digital payment arm PhonePe, enabling the latter to make a separate board and raise funds independently to fuel its future growth as competition in India’s payment sector picks up steam.

PhonePe is also raising USD 700 million led by its parent Walmart at a post-money valuation of USD 5.5 billion, the company said in a statement. The digital payment startup that competes with the likes of Paytm, Google Pay, Amazon Pay, and now WhatsApp, received USD 60 million from Flipkart in April this year.

“Recognizing the momentum that has been achieved, as well as PhonePe’s significant growth potential, Flipkart’s Board determined that this was the right time to partially spin off PhonePe so it can access dedicated capital to fund its long-term ambitions over the next three to four years,” Flipkart said.

PhonePe claimed it has over 250 million users on its platform with over 100 million monthly active users (MAU). In October, PhonePe emerged as the largest platform in the UPI payment ecosystem—an interoperable digital payment system co-launched by local banking dynamos. PhonePe claimed it has a market share of more than 40% and processed 835 million transactions on UPI in October, its highest ever.

“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,” said Kalyan Krishnamurthy, CEO of Flipkart Group.

With the partial separation from its parent company, PhonePe would also start to chart out ESOP allotment to its employees.

This development comes at a time as Flipkart prepares for a public listing next year. Currently valued at USD 25 billion in its latest fund raise in July, Flipkart could be valued at USD 45 billion in its IPO, a report by local media Mint said.

As tech-based unicorn companies become a household name in the country, a handful of them are looking at an IPO in the next couple of years. A report by global brokerage and research firm Bernstein, said internet giants Paytm, Zomato, Big Basket, PolicyBazaar, and others could be in for making their stock market debuts in 2021 and beyond that.