Walmart picks up 77% stake in Flipkart for $16 billion

[Varun]

NEW DELHI: India's largest e-commerce company Flipkart on Wednesday agreed to sell 77 per cent stake to US retail giant Walmart for $16 billion, sources told TOI.

Walmart also plans to pump $2-3 billion (over Rs 13,000 crore) as fresh equity into Flipkart to strengthen its hold on the e-commerce firm.
Earlier in the day, SoftBank -- the largest investor in the e-tailer -- confirmed that Walmart-Flipkart agreement was made on Tuesday night (Japanese time), when it would have been afternoon in India.

Rival Amazon too was reportedly in the race to acquire Flipkart, but the Indian online retailer went for the deal offered by Walmart.

According to analysts, the deal is the world's biggest-ever e-commerce acquisition and would pit Walmart head-to-head against Amazon in one of the world's fastest growing markets. As the e-commerce battle in India hots up even further with this latest development, Amazon in the meantime, has pumped Rs 2,600 crore into its main India unit — Amazon Seller Services — taking the total capital infusion into the entity to over Rs 10,750 crore in a little over a year.

E-commerce sales in India hit $21 billion last year, according to market research company Forrester and are expected to soar as more people make greater use of internet access.

Flipkart sells everything from mobile phones, television sets, juicers to running shoes, sofas and beauty products. Amazon too has a similar range of product offering.

Walmart CEO Doug McMillon arrived in Bengaluru to make the announcement of the deal. The US retail giant is likely to bring its managerial expertise, although the existing leadership in Flipkart is expected to stay as they "understand the market well". Currently, Walmart India owns and operates 21 stores under the cash-and-carry system in nine states across the country.

There had been months of speculation that Walmart was preparing to buy Flipkart but both had repeatedly declined to comment on the talks.

Japan's SoftBank is currently the largest investor in Flipkart with a 23-24 per cent stake, along with early backer South African media and internet giant Naspers, which holds 13 per cent. Other investors include New York-based hedge fund Tiger Global, US private-equity firm Accel Partners, China's Tencent Holdings Ltd, eBay Inc and Microsoft Corp.

In terms of financial statistics, Flipkart Group's consolidated loss attributable to owners of the company in fiscal 2017 widened to Rs 8,770 crore, from Rs 5,216 crore a year earlier. Consolidated revenue jumped 29 per cent to Rs 19,855 crore in fiscal 2017.

Flipkart was founded 11 years ago in 2007 by IITians Sachin Bansal and Binny Bansal from a two-bedroom apartment in Bengaluru's Koramangala area as an online bookstore. Although they share the same last name and come from Chandigarh, the two Bansals are not related. A batch apart in IIT-Delhi, they became friends while working together at Amazon and decided to start Flipkart.

https://timesofindia.indiatimes.com...r-16-billion-sources/articleshow/64094801.cms

Interesting move from Walmart. This is India's largest ever FDI deal, and the largest e-commerce deal in the world.

At the same time, this is a homegrown brand being taken over by a foreign retailer. I predict some heat for Amazon in the medium term.

 

[cricketjoshila]

21bn valuation. Not bad.

 

[Pakistanian]

So the current owners are Japanese and they're selling to Walmart, I don't see how this company is Indian.

 

[Oxfordchamp]

So the current owners are Japanese and they're selling to Walmart, I don't see how this company is Indian.

SoftBank is an investor which owned just 20% stake in Flipkart..

 

[sshakir411]

How well did Flipkart’s investors do?

Walmart’s agreement to buy a 77 percent stake in Flipkart for $16 billion — or a $20.8 billion valuation — is the American retail giant’s biggest takeover in years. And it’s set to give some of the Indian e-commerce company’s investors a healthy return.

Here’s how well some of them did:

• Accel, which was one of Flipkart’s original investors, will be one of the biggest winners, according to a person with knowledge of its investment who was not authorized to talk publicly about them. The firm made a sevenfold return on its investments in Flipkart. That includes a return of 71 times at Accel’s India fund.

• Tiger Global Management, which first invested in Flipkart’s Series A and poured about $1 billion into the company, according to a person with knowledge of its investment but was not authorized to talk publicly about it. Overall return: 4 times

• Naspers, the South African media investor that first invested in Flipkart in 2012 and has poured $616 million, sold out at $2.2 billion, according to Bloomberg. Overall return: 3.6 times

• SoftBank, which invested $2.5 billion in Flipkart in August through its Vision Fund, is selling out at a $4 billion valuation, according to its founder, Masa Son. Overall return: 60 percent

Some investors who are keeping stakes in Flipkart — including Tiger Global, which will maintain a roughly 5 percent stake, Microsoft and the Chinese internet giant Tencent — could continue to reap returns should Flipkart eventually go public.

— Michael J. de la Merced

https://nyti.ms/2KNU0Ht

I personally think Walmart will lose to Amazon in India but Flipkart is a good buy.

 

[jusarrived]

I personally think Walmart will lose to Amazon in India but Flipkart is a good buy.

They may lose to Amazon but could still have a profitable business , the market is expected to grow tenfold to $200 billion in 10 years , there is enough space for 3-4 big players .