Bloomberg News reports that Walmart spent USD1.4 billion to purchase Tiger Global Management’s residual stake in Flipkart. This lent a boost to its bet on the Indian retailer. It also helped money managers provide distributions to investors when it is difficult to access liquidity.
The transaction
The transaction took place recently. Following the same, the Indian e-commerce giant was valued at $35 billion. This was revealed in a letter to the investors sent by Tiger Global. Bloomberg News collected the same.
However, that is down from the valuation of almost $38 billion Flipkart had in the 2021 funding round. A spokesperson on behalf of the company refused to comment on the deal. Wall Street Journal reported the deal early on Sunday.
The venture capital firm Accel separately sold around a 1% stake in Flipkart to Walmart. This sale will let Tiger Global an opportunity to exit the long-time investment successfully in an Indian startup. In the initial stages, the firm injected $8.6 million into the Flipkart Series B round in 2009.
The valuation was at that time $42 million before it could add subsequent $1.2 billion during 2010 and 2015, as per the letter. The investments made were through Private Investment Partners, which funds five through nine, and the hedge funds, which are the long-only vehicle belonging to them.
Flipkart and Softbank
Bloomberg News reports that in 2017, Tiger Global sold a portion of its Flipkart stake to the SoftBank Group Corp. Just a year later, it sold to Walmart. In total, the investment in Flipkart aided in generating gains worth $3.5 billion, the money manager revealed this in the letter. It also added that it intends to provide distribution details in the forthcoming weeks.
In 2018, Walmart first paid $16 billion to get a stake of 77% in Flipkart. Walmart has consistently accelerated its effort to make inroads into the consumer market, which is growing in India.
What does the acquisition in the stake mean?
Acquisition of the stakes from Accel and Tiger Global implies that Walmart will now be holding 77% of Flipkart, which was earlier 72%.
