In a strategic move aimed at solidifying its position in the rapidly growing Indian e-commerce market, retail giant Walmart has invested a staggering $3.5 billion to acquire more shares in the e-commerce behemoth Flipkart.
This significant investment involves purchasing shares from non-controlling stakeholders, including co-founder Binny Bansal and prominent investment firms such as Tiger Global and Accel, among others.
The transaction details were disclosed in a Securities and Exchange Commission (SEC) filing in the United States. According to the filing, this major financial move took place over the six months leading up to July 31, 2023. During this period, Walmart not only acquired shares from select non-controlling interest holders of Flipkart but also settled its liability to former non-controlling interest holders of PhonePe, a subsidiary of Flipkart.
Walmart’s strategic focus on the Indian market is evident as it also received an infusion of $0.7 billion through fresh rounds of equity funding for its majority-owned subsidiary, PhonePe, during the same six-month period, IANS reports.
One of the noteworthy outcomes of this investment was the substantial payout to Flipkart’s co-founder, Binny Bansal, who reportedly received between $1 billion to $1.5 billion from his shareholding in Flipkart. Binny and Sachin Bansal, the co-founders of Flipkart, had previously exited the company after selling it to Walmart in 2018 for approximately $16 billion.
This isn’t the first time Binny Bansal has made headlines for lucrative deals. Last year, he sold his stake in Flipkart worth a staggering $264 million to the Chinese Internet giant Tencent.
In a bid to further consolidate its control over Flipkart, Walmart also made a substantial payment of $1.4 billion in July to acquire the remaining shares owned by the venture capital firm Tiger Global. This move, as reported by the Wall Street Journal, was part of Walmart’s overarching strategy to boost its stake in Flipkart. Tiger Global, with an initial investment of $1.2 billion, made a remarkable gain of $3.5 billion through this transaction.
Flipkart, a leading player in the Indian e-commerce ecosystem, was valued at $37.6 billion in a funding round in 2021. As of the latest reports, Walmart holds a commanding 72 percent stake in Flipkart, further solidifying its position as a dominant force in the Indian e-commerce landscape.
Walmart’s substantial investments in Flipkart underscore the company’s commitment to tapping into India’s vast consumer market, where e-commerce is experiencing remarkable growth and offers immense potential for expansion and profitability.