Walmart invests $3.5 billion in Flipkart, ups stake to 80.5%

NEW DELHI — Walmart has invested $3.5 billion this year to boost its share in the Indian business Flipkart to 80.5%. This highlights the strong wagers the United States-based retailer is making in the nation, which it regards as one of its main markets. In July, a number of Flipkart's early investors, including Tiger Global, Accel, and co-founder Binny Bansal, sold their remaining holdings in the company to Walmart in order to totally depart the business. According to data obtained from a market research company called Tracxn, at the time of the deal, Tiger Global controlled around 4.1% of the company's total interest in Flipkart, while Accel and Binny Bansal held approximately 1.1% and 1.8% of the company's total investment, respectively.

According to a document that Walmart issued with the US Securities and Exchange Commission, some sections of the sum were also used to satisfy liabilities with some shareholders of PhonePe.

According to the document, Walmart stated that during the six months that concluded on July 31, 2023, the firm spent $3.5 billion to acquire shares from certain Flipkart non-controlling interest holders and to resolve the liabilities to former non-controlling interest holders of PhonePe. 

According to the price that Tiger Global was willing to pay for Flipkart, the e-commerce platform had a valuation of approximately $35 billion. Walmart has also coled a $3.6 billion investing in Flipkart in 2021 together with a few other investors at a valuation of $37.6 billion. This investment was made by Flipkart.

Walmart, which competes with global and local behemoths like Amazon, Reliance, and Tata in the Indian ecommerce arena, has been substantially involved in the market and plans to take Flipkart, public in the coming years.

Judith McKenna, who is stepping down from her position as president and CEO of Walmart International, was quoted as saying in a recent interview that the Flipkart business continues to perform and is a strong competitor in the Indian market.

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It is challenging to create a business model that is comparable to Flipkart's in terms of both its pace and its capacity for innovation. "We have a business in Africa called Massmart, and we have asked them to be the partners and actually build the marketplace there," McKenna had told TOI, adding that the possibility in India is substantial.

In 2018, Walmart spent $16 billion to acquire a controlling stake of 77% in the e-commerce company Flipkart, which was established by Sachin Bansal and Binny Bansal, both of whom graduated from the Indian Institute of Technology.

A valuation of $21 billion had been assigned to Flipkart at the time of the transaction. Sachin Bansal, one of the co-founders of the company, decided to leave the business and sell his entire 5.5% ownership to Walmart for around one billion dollars as part of the transaction.

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