The US retail behemoth and prime shareholder of Flipkart, Walmart has announced a new investment of $1.2 billion in the Indian e-commerce unicorn. It will increase the percentage of majority-stake of Walmart in the e-commerce platform and will bring up the post-money valuation of Flipkart to $24.9 billion. In 2018, Walmart acquired 77 percent of Flipkart with $16 billion in the biggest-ever acquisition in the history of e-commerce.
Post the investment, Walmart’s stake in Flipkart will go up by a percentage further. Apart from Walmart, other backers of Flipkart namely, Tiger Global, Tencent and Accel also agreed to participate in the round. The investment will come in two tranches.
Walmart-Flipkart Deal In 2018
Walmart’s acquisition of Flipkart in 2018 was a milestone on several counts. It led to the introduction of the US’s largest retailers in the expanding Indian market and giving it a level playing field with rival Amazon. It was the largest deal in the history of Walmart. It was also a deal that pronounced the exit of the largest private equity and venture capital investors in India. The deal also left the promoters of Flipkart, Sachin and Binny Bansal $14 billion richer.
The Walmart Investment In Flipkart In 2020
The Walmart investment in Flipkart in the current situation is significant when the e-commerce sector is trying to get back up on feet in the wake of the pandemic. India is the second-largest internet market in the world, and Flipkart is one of the major players. In announcing the news, Flipkart CEO Kalyan Krishnamurthy mentioned,
“Since Walmart’s initial investment in Flipkart, we have greatly expanded our offer through technology, partnerships and new services. Today, we lead in electronics and fashion and are rapidly accelerating share in other general merchandise categories and grocery, all while providing increasingly seamless payment and delivery options for our customers. We will continue innovating to bring the next 200 million Indian shoppers online.”
Flipkart is the primary competitor of Amazon in India. And, both have a somewhat similar journey in 2019. However, Flipkart registered higher revenue growth than Amazon. Also, its number of active customers increased by 45 percent during the year ending in March 2020 and recorded 30 percent more transactions. Flipkart has also crossed 1.5 billion monthly visit mark.
The additional investment came at the time when Indian e-commerce platforms are witnessing a surge in traffic and business. In the wake of COVID-19 online shopping is going to be the new normal. There is an upsurge in demand for casual wear, electronics, kitchen appliances, and smartphones, along with groceries and other daily essentials. It will help Flipkart to ride the new wave and also prepare it to fight new competition as Reliance backed JioMart is all poised to take on the Indian e-commerce sector.
The additional investment will further strengthen the capital base of Flipkart and allow funds for innovation. Experts believe that Flipkart will channelise the funds towards enhancing efficiency in areas of grocery segment and creating an ecosystem like Amazon and JioMart. Currently, Flipkart offers over 150 million products in 80 plus categories.