Walmart Ups Flipkart Stake as Valuation Shrinks to $35 Billion
Walmart is chipping away at its main competitor Amazon wherever and however it can, this time taking a bigger stake in Indian e-commerce firm Flipkart.
“We value Tiger Global’s involvement and support over the last several years. We remain confident in the future of Flipkart and are even more positive about the opportunity in India today than when we first invested,” a Walmart spokesperson said. “We continue to be impressed with Flipkart’s progress and remain focused on building a healthy, sustainable and profitable business for the long term, ensuring Flipkart continues to grow in an emerging and dynamic market.”
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Walmart did not disclose financial details, but on Sunday The Wall Street Journal, which first reported on the deal, put the deal at $1.4 billion, valuing Flipkart at $35 billion.
The American discounter acquired a 77 percent stake in Flipkart for $16 billion in August 2018. Since then, it has invested heavily to scale the infrastructure for Flipkart, now considered a major Amazon competitor in India.
Walmart upped its stake in Flipkart in July 2020, valuing the Indian e-commerce platform at $24.9 billion. Flipkart’s $3.6 billion raise in July 2021 lifted its value to $37.6 billion.
Walmart is interested in owning a piece of the Indian e-commerce industry, the world’s fastest growing, according to Invest India. Estimated at over $55 billion in gross merchandise value (GMV) in 2021, it’s expected to lap $350 billion by 2030, it added. Internet access, smartphone adoption and rising income are powering this growth.
Invest India, a non-profit agency operating under the Department of Industrial Policy and Promotion, Ministry of Commerce and Industries, helps investors looking for investment opportunities in India. The agency has noted that more than “60 percent of transactions and orders in India come from tier two cities and smaller towns,” and that e-commerce is growing even in tier 2- and tier-3 cities “as they now make up nearly half of all shoppers and contribute three of every five orders for leading e-retail platforms.” In addition, electronics and apparel make up “nearly 70 percent of the e-commerce market, when valued against transaction value.” Ed-tech, hyperlocal and food-tech are other areas of hot e-comm growth.
Citing the ONDC, a network aimed at democratizing e-commerce and providing equal opportunities in digital commerce, Invest India noted that Indian e-commerce and consumer internet companies last year raised $15.4 billion in private equity-venture capital finding, double the $8.2 billion they raised in 2020.
Walmart was thought to be eyeing an initial public offering for Flipkart, although market conditions have interfered with that timing.
A Flipkart spokesperson told Sourcing Journal in 2020 that an IPO is part of the company’s long-term strategy, though the focus then was on growth. Last year, Flipkart was believed to have delayed its IPO after Russia invaded Ukraine.
