Walmart Stores Inc is in negotiations to become the largest shareholder in Flipkart, India’s largest online retail company. Walmart, which operates wholesale stores in India called Best Price, is the world’s largest brick-and-mortar retailer. It will acquire 20-26 per cent stake in the Indian e-retailer.
The shareholding could go up to 51 per cent later, according to the Economic Times. The initial investment will be around $1-2 billion and could go up to $10-12 billion. The agreement includes sale of shares owned by Japanese telecom giant SoftBank.
“The primary investment will be between $1-2 bn, depending on the final size of the deal. The rest will be Walmart buying shares from other investors,” ET quoted a source as saying.
With the primary investment, the value of the Bengaluru-based company could stand around $20-22 billion, a significant increase from the $10.2 billion valuation it got in April 2017. Walmart may also take hands-on approach in managing Flipkart.
According to the Economic Times, Walmart CEO Doug McMillon led a delegation that visited Flipkart’s Bengaluru office in January. He was accompanied by Marc Lore, the CEO of Walmart e-commerce, and Judith McKenna, the CEO of Walmart International. Walmart’s investment negotiations with Flipkart also include a proposal to open a chain of retail stores in India, ET reported on Feb. 20.
Walmart also sees Amazon as an opponent in India in the retail industry. Amazon recently announced that it would be investing $5 billion to grow its business in India. Another competitor in this sector is Paytm Mall, backed by Chinese e-commerce major Alibaba, which may soon have investment from SoftBank too.
“As large as they (Walmart) are, Amazon has eaten away a significant chunk of their revenues and I think… they view India as the largest market possibly for this (taking on Amazon),” a source said, Business Today reported.
In 2017, Flipkart raised $4 billion in funding from SoftBank, Tiger Global and South African media giant Naspers.
Walmart announced in September 2017 the launch of its Cash & Carry business in Mumbai for small businesses. The Cash & Carry would cater to the business needs of small businesses, resellers, kirana stores, office and institutions and HoReCa members of Mumbai city and neighboring areas.