• Walmart Buys Stake in Flipkart
What will be the implications?
Walmart Inc. announced it has signed definitive agreements to become the largest shareholder in Flipkart Group. The investment will help accelerate Flipkart’s customerfocused mission to transform commerce in India through technology and underscores Walmart’s commitment to sustained job creation and investment in India, one of the largest and fastestgrowing economies in the world.
Subject to regulatory approval in India, Walmart will pay approximately $16 billion for an initial stake of approximately 77% in Flipkart, formally Flipkart Private Limited. The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited,
Tiger Global Management LLC and Microsoft Corp. While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of ecommerce in the market,” said
Doug Mcmillon, Walmart’s president and chief executive officer.
Walmart’s investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake moving lower after the transaction is complete. Even so, the company would retain clear majority ownership. With the investment, Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe. Job creation, as plans would create jobs through development of supply chains, commercial opportunity and direct employment. Supporting small business and ‘Make in India,’ through direct procurement as well as increased opportunities for exports through global sourcing and ecommerce.
The American-based business now owns Flipkart but has stated several times in official announcements that Flipkart will retain its name and much of its management. However, Walmart may well further increase its stake in the e-commerce platform. In order to acquire an even greater stake in
Flipkart, Walmart could invest a further three billion US dollars.