Naspers cashes in after selling out to Walmart

It was just a matter of time before the world’s largest retailer got its hands on the biggest e-commerce company in the world’s fastest-growing retail market – a transaction that earned SAbased Naspers a tidy $2.2 billion (about R27.6 billion).

The buyer was US retailer Walmart, which on Wednesday announced that it had acquired 77% of Indian e-commerce firm Flipkart for $16 billion, valuing the e-commerce player at over $20 billion. Walmart acquired the stake from, among others, Flip- kart co-founder Sachin Bansal, who has now exited the firm completely, and from Naspers which sold its 11.18% stake.

Naspers first invested in the business in August 2012 and its cumulative investment to the point of sale amounted to $616 million, representing an IRR of 32%.

Flipkart is one of several businesses that Naspers has invested in or built in India. Following this sale, Naspers retains stakes in India’s online classifieds business OLX; payment and fintech company PayU; food delivery company Swiggy and online travel business MakeMyTrip.

“India is one of the most exciting markets in the world,” says Bob van Dijk, Naspers group CEO.

However, “our decision to sell is consistent with our strategy to realise value from the businesses we help to build”.

While Naspers has not divested from India, it has also not fully divested from Flipkart or Walmart. It remains indirectly invested in Flipkart via Tencent which is still invested in the company, has a seat on the board and is viewed by Walmart as a key strategic partner.

Walmart and Tencent are connected via more than just Flipkart. Walmart owns a 12.1% stake in Tencent subsidiary JD.com, China’s second largest e-commerce company. In fact, Walmart has shut down its own e-commerce mobile app in China in favour of highlighting JD.com’s flagship store in China.

Walmart has also opted to use Tencent’s mobile payment system, WeChat, dropping the Alibaba-linked Alipay in all its stores in the western region of China.

This relationship could see Walmart and Tencent or Naspers doing deals together in other parts of the world.

Naspers will use the proceeds of this transaction to further reinforce its balance sheet.

In addition, the funds will be invested over time to accelerate the growth of Naspers’ classifieds, online food delivery and fintech businesses globally.