Walmart Bolsters Its Stake in Flipkart with a $3.5 Billion Investment
In a bold move to solidify its foothold in the Indian e-commerce sector, American retail behemoth Walmart has disclosed a hefty $3.5 billion investment in the first half of 2023. This investment was channeled towards acquiring additional shares in Flipkart from non-majority shareholders. Notably, this includes the shares previously owned by Flipkart’s co-founder, Binny Bansal, and significant investments from industry bigwigs like Accel and Tiger Global Management. This revelation came to light in a recent filing with the Securities and Exchange Commission (SEC).
This strategic acquisition by Walmart follows the decision of several influential investors, including Binny Bansal, Accel, and Tiger Global Management, to divest their stakes in Flipkart. Additionally, a number of senior and long-standing employees have monetized their ESOPs by selling them to Walmart. These series of transactions have catapulted Walmart’s ownership in Flipkart to an impressive 80%.
In its SEC filing, Walmart stated, “Over the six months concluding on 31 July 2023, we invested $3.5 billion to purchase shares from specific non-majority shareholders of Flipkart and to settle liabilities with former non-majority shareholders of PhonePe. Furthermore, during this period, we secured $0.7 billion from fresh equity funding rounds for our predominantly owned subsidiary, PhonePe.”
Walmart’s alliance with Flipkart dates back to 2018 when the U.S. retail titan acquired a commanding 77% stake in the Indian e-commerce leader for a staggering $16 billion. Data from Tracxn, a private market data aggregator, indicates that Walmart’s stake in Flipkart has experienced slight variations over the years but currently hovers just above 80%. This strategic partnership has been pivotal in Walmart’s expansion in India’s burgeoning e-commerce arena.
Accel, a foundational investor in Flipkart, was instrumental in its ascent. Its initial investment in 2008 garnered it over 20% in Flipkart. However, by the time of Walmart’s 2018 acquisition, this had dwindled to about 6%. Accel’s divestment from Flipkart has yielded returns in the ballpark of $1.5 billion to $2 billion, a remarkable uptick from its initial investment of $60 million to $80 million. Similarly, Tiger Global Management’s exit has been lucrative, with returns approximating $3.5 billion from its 4.7% stake, marking one of its most fruitful ventures in the South Asian domain.
India’s e-commerce landscape is a hotbed of competition, with global giants vying for a slice of the pie. As we’ve reported, corporations like Walmart, Apple, and Tesla are heavily invested in India’s growth trajectory. Walmart’s recent mammoth investment in Flipkart is particularly noteworthy, especially as competitors like Amazon are reportedly scaling down their Indian investments. In contrast to Walmart’s $3.5 billion investment in Flipkart this year, Amazon is projected to invest a comparatively modest $2.5 billion in its Indian operations over the forthcoming seven years.
