Walmart Inc has led a $1.2 billion investment in Flipkart Group, valuing the company at $24.9 billion, about 19% higher than when it sold a majority stake to the US retail behemoth.
A group of existing shareholders also participated in the round, Walmart said in a statement, adding that the investment would be funded in two tranches over the remainder of the fiscal year. Tiger Global, Tencent and Accel are Flipkart’s other existing backers.
The commitment from the world’s largest brick-and-mortar retailer comes at a time when the Indian online retail battle is being redrawn with Reliance Jio’s plans to leverage its telecom reach to propel online commerce.
The capital from Walmart, which already owns around 80% in the Bengaluru-based online retailer, will take its shareholding up by a percentage or so, said people in the know.
This is the largest such fundraising for Flipkart since Walmart acquired it two years ago for $16 billion, valuing it at $21 billion then, making it one of the largest foreign investments in the country’s fledgling internet ecosystem.
“Today, we lead in electronics and fashion and are rapidly accelerating share in other general merchandise categories and grocery…We will continue innovating to bring the next 200 million Indian shoppers online,” said Kalyan Krishnamurthy, CEO of Flipkart Group.
The backing of Walmart coincides with Mukesh Ambani-led Jio Platforms amassing $15 billion from myriad investors, including social media leader Facebook and private equity firms such as Silver Lake and KKR.
On Tuesday, news agency Bloomberg reported that Google was in talks to plough around $4 billion in Reliance Jio Platforms, giving it further ammunition to transform itself into a technology behemoth. Recently, JioMart, its ecommerce offering housed under Reliance Retail, launched across 200 cities in the country.
In January, Amazon founder and CEO Jeff Bezos committed an additional $1 billion to the Indian market to digitise over 10 million small businesses.
“Flipkart is preparing for investment in building up grocery and creation of a competing ecosystem like Amazon and Jio,” said Satish Meena, senior analyst at Forrester Research. “Also, the fight is going to be very competitive while working with small businesses as everyone wants to work with them,” he said.
Other analysts also said investing in grocery is a cash intensive game and Flipkart would need the capital to scale up that business going forward.
“Flipkart continues to leverage its culture of innovation to accelerate growth and enable millions of customers, sellers, merchants and small businesses to prosper and be a part of India’s digital transformation,” said Judith McKenna, President and CEO of Walmart International.
According to a statement by Flipkart, the company recently surpassed 1.5 billion visits per month and reported 45% growth in monthly active customers and a 30% growth in transactions per customer for fiscal year 2020.
Walmart’s latest investment in Flipkart comes on the back of massive growth of its own e-commerce business in the US, with online sales growing by 74% in the first quarter, driven by increased demand due to the Covid-19 pandemic. Last month, the company also partnered with Amazon rival Shopify, that would allow small sellers to list their products on Walmart.com.
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