According to reports, Walmart-owned homegrown ecommerce marketplace Flipkart is likely to facilitate a $700 million employee stock buyback as part of digital payments platform PhonePe’s new financing round.

The buyback, likely the largest in India’s new-age internet economy, is part of PhonePe’s latest $1.5-2 billion funding round led by Walmart, where the US retailing behemoth and private equity fund General Atlantic will infuse primary capital of about $1 billion, with the rest comprising a secondary share sale.

Multiple current and former employees have been briefed on the upcoming liquidity event and a formal communication is expected in a month, sources privy to the development said on condition of anonymity.

The entire transaction will also lead to a readjustment in Flipkart's valuation to about $33 billion from $37.6 billion earlier, as PhonePe will have a separate shareholding structure, as per reports.

PhonePe, valued at $5.5 billion, is currently marked as an asset within Flipkart’s valuation.

The employee stock ownership plan (Esop) buyback is significant not only because of its size but also as it comes at a time when the domestic technology and startup ecosystem is witnessing a funding crunch, in line with what is being seen in the global technology industry globally.

The Flipkart Group (which includes fashion portal Myntra) is offering existing investors and employees (Esop holders) the option of either reinvesting in the latest round or selling shares in secondary transactions.

At a $12 billion valuation for the PhonePe transaction, the employee group will see liquidation of around $700 million, taking the total round size to well over $1.5-2 billion, including the secondary share sale, as per reports.

Employee group shareholders are likely to sell their shares to Walmart as investing in PhonePe in a new round would also incur a significant tax payout for paper money gains in PhonePe as opposed to a cash payout.