• Wal­mart Buys Stake in Flip­kart

What will be the im­pli­ca­tions?

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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.

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