Walmart aims to expand its e-commerce business’s reach in India, which is why it now considers raising $2-$3 billion for Flipkart, its subsidiary. The US-based multi-national retail corporation, which backs one of the most esteemed e-commerce platforms operating in India, will do so at the current Flipkart valuation of over $40 billion in an attempt to challenge the rivals by expanding the product range in the Indian subcontinent.
Walmart, one of the biggest global retailers, is in favorable position to invest more in the Walmart Flipkart venture as the e-Commerce business is seeing rapid and consistent growth in recent years.
According to a news report, the Indian e-commerce giant may experience a 7 percent dilution if it raises to $3 billion.
The Walmart Flipkart Deal
The US retailing giant purchased a 77% Flipkart stake in 2018 for around $16 billion and later that year stated that it could float the company in four years.
Why this Fundraising?
The intention of the retail giant behind this fundraising is, as per reports, to involve strategic partners for its Indian subsidiary. According to the reports, the Walmart subsidiary may also be sold to any large investment firm.
The fundraising, if it happens, will allow the e-commerce platform more strength to fight against Amazon, Jio Mart, and other companies in the same space.
What Walmart and its Subsidiary Said?
Investment bankers will look for large investors as well as strategic partners for which the leading retailer is yet to mandate formally. Neither Walmart nor Flipkart was ready to comment on the fundraising officially and added that these are nothing but speculations.
One of the sources who fueled the news reports cited that the funds could be used for prospective acquisitions in the realm of Indian e-commerce and adding resources like new storage and workforce.
The Previous Funding Round
Walmart Flipkart, via fundraising, managed $3.6 billion last year in July, and the valuation at that time was $37.6 billion. Some participants were Canada Pension Plan Investment Board, Walmart itself, SoftBank Vision Fund 2, GIC, Khazanah Nasional Bhd, Qatar Investment Authority, Franklin Templeton, Tencent, and Tiger Global.
The Chief Executive Officer of the Walmart subsidiary, Kalyan Krishnamurthy, said that the investment from large global investors shows the company’s credibility and potential capabilities.
Walmart CEO and President Judith McKenna stated that the quality and valuation of the investors reflect their confidence in the company.
Current Conditions and Prospects of Flipkart
According to an international news agency report, the Indian e-commerce giant has increased its internal IPO valuation target by almost a third to $70 billion from $60 billion and anticipates listing in the US in 2023 rather than this year.
The e-commerce platform and Amazon are most popular among Indian customers who prefer buying various things online. Recent years have seen further growth for these e-commerce giants due to the digitization drive by the Indian government and people’s tendency to avoid physical stores during the pandemic.
After the Walmart Flipkart acquisition deal, the company further expanded to new locations across India and new product ranges. It now sells almost all grocery products and furniture and possesses more warehouses for faster delivery. It also offers Flipkart Pay Later service.
The Walmart subsidiary acquired Upstream Commerce, an Israeli startup, and started a research and development wing in Israel.
Conclusion
This festive season brought around $5.7 billion in sales to e-commerce platforms in India, which is a growth of 27% compared to the last year. Mobile phones have been purchased the most, 41% of the gross merchandise value, and statistics show that as many as 56,000 mobile devices were purchased every hour. The subsidiary to the global retail giant, along with Myntra and Shopsy, leads the market.
Therefore, Walmart strives to develop its footprint in the e-commerce space of South Asia and looks into growing its stakes further in the Indian e-commerce giant.
