Walmart to raise $3bn for Flipkart

“Walmart may prefer to bring strategic investors into Walmart-Flipkart through this fundraising, unlike in the last round. However, Walmart-Flipkart is also open to selling to large pure-play investment firms,” one of the two people said.

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Flipkart last raised around $3.6 billion in July last year. Most of this capital has been deployed, and about $700-800 million is left, according to the two people cited above.

“Walmart is keen to bring in strategic investors in Walmart-Flipkart so that Flipkart can get additional expertise as well as consistent funding support as and when required to stay ahead in the country’s e-commerce competition,” the first person said, requesting anonymity.

A Walmart spokesperson declined to comment on what it termed as speculation. A Flipkart spokeswoman said there are no such plans at the moment, and the news is speculative and inaccurate.

Walmart is yet to formally mandate investment bankers to look for strategic partners and large global investors for the latest fundraising plan.

“The funds could be used not only for adding resources, such as fulfilment centres (storages and warehouses), new businesses and workforce but also for potential acquisitions in the Indian e-commerce space,” the first person said.

Flipkart is currently valued at over $40 billion and may dilute around 7% for raising as much as $3 billion, the people cited above said.

Since Walmart acquired a 77% stake in Flipkart for $16 billion in 2018, the e-commerce firm carried out its first capital infusion round in July last year, valuing Flipkart at around $37 billion.

The planned fundraising will help Flipkart build a war chest to compete with aggressive rivals Amazon India, Reliance Industries’ Jio Mart and the Tata group.

In the last funding round, Canada Pension Plan Investment Board, the Singapore government’s sovereign wealth fund GIC, Japan’s SoftBank Vision Fund 2 and Flipkart parent Walmart led the capital infusion, with participation from Qatar Investment Authority, Malaysia’s Khazanah Nasional Bhd and DisruptAD, China’s Tencent, Franklin Templeton and Tiger Global.

However, according to the latest fundraising plan, Walmart is keen to bring in strategic players who could not only put in money to power Flipkart’s growth, but also provide expertise to help Flipkart stay in the country’s e-commerce space.

Over the past three years, the government’s digitization push and customers’ preference for online transactions amid the pandemic have boosted the businesses of e-commerce platforms such as Flipkart and Amazon.

Since Walmart’s acquisition, Flipkart has expanded to newer locations in India and added new product categories to its online marketplace. For example, Flipkart now sells furniture and a full range of grocery items on its platform. The e-commerce company has also added new warehouses to deliver products faster.

Over the past year, Flipkart has also started Flipkart Pay Later services and opened a research and development centre in Israel after it acquired Israeli startup Upstream Commerce.

As of July 2021, Walmart owned 72%, Tencent 5.3%, Tiger Global 4.1%, founder Binny Bansal 2.4%, CPPIB 2.2%, SoftBank 1.4%, Qatar Investment Authority 1.3%, Microsoft 1.2%, and Accel Partners 1.1% in Flipkart.