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Walmart's record-setting Flipkart acquisition contained a hidden gem that could be worth up to $10 billion (WMT)

Walmart purchased Flipkart in 2018 for $16 billion as a way to break into the growing Indian e-commerce market. It marked the biggest acquisition in the retailer's history.

Doug McMillon Walmart CEO
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When Walmart dropped $16 billion on Indian e-commerce giant Flipkart last year in its biggest-ever acquisition, it didn't expect to also scoop up a startup worth as much as $10 billion.

Flipkart's board of directors is exploring a spin-off of PhonePe Pvt Ltd., a digital payments subsidiary, in a transaction that would seek $1 billion in funding for the venture, according to a new report from Bloomberg .

Bloomberg reported the unit could achieve a valuation of as much as $10 billion, or almost two-thirds of what Walmart paid for Flipkart initially. The funding round has not been finalized yet, according to Bloomberg's sources, but the deal could be closed in the coming months.

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If the deal is completed, PhonePe Pvt would become a stand-alone company with its own group investors, and Flipkart will remain a shareholder.

PhonePe Pvt has developed into one of India's dominant digital payments providers as the service's transaction volume and value has increase four-fold over the past year, according to Bloomberg.

Edward Yurma, an analyst at KeyBanc Capital Markets, said PhonePe could be valued up to $15 billion, Bloomberg reported.

Walmart bought Flipkart in an attempt to push further into ecommerce and compete with the likes of Amazon.

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Walmart's stock is up 22% year-to-date.

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