Walmart buys controlling stake in India's Flipkart

11 May, 2018, 03:59 | Author: Patty Hardy
  • Walmart buys 77 percent stake in Flipkart for USD 16 billion

U.S. retail giant Walmart will buy a majority stake in India's largest e-commerce company Flipkart, according to the head of SoftBank, a major stakeholder in the Indian firm.

US-based eBay on Wednesday said it plans to sell its stake in Flipkart for about $ 1.1 billion, and will relaunch eBay India focusing initially on cross border trade opportunity.

The deal is expected to value Flipkart at around $20 billion (roughly Rs. 1.34 lakh crores).

In March, Meena forecasted that India's online retail market remained the fastest-growing market in the world.

Walmart will retain Flipkart's management led by co-founder Binny Bansal and CEO Kalyan Krishnamurthy. The companies said they're also in talks with other potential investors, which could result in the USA company's stake being lowered, though it will retain majority ownership.

Walmart said on Wednesday it reached a $16 billion deal to buy a majority stake in Flipkart, India's leading e-commerce platform, in a sizable bet on a vibrant but risky new market. "Our investment will benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers, and women entrepreneurs". The deal, advised by JP Morgan from the Walmart side and Goldman Sachs for Flipkart, would bring in the largest piece of FDI into India.

To get an early advantage in the nascent grocery industry in India, Future Group is all set to launch e-commerce app for grocery delivery offering the daily and weekly requirements to consumers.

Today, the company sells 80 million products across more than 80 categories and has 100 million registered users, according to its website.

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"Flipkart will diversify its inventory to attract more Indian consumer segments that haven't started shopping online", said Lee.

In a statement released later that day confirming the deal, Walmart said its acquisition bid was subject to approval from Indian authorities. With the integration of Jet in the United States well under way, Walmart has gotten better at rolling out new changes and incorporating these lessons into the core business. This investment definitely opens new doors for the company in India.

The deal is the largest-ever in e-commerce, according to data compiled by Bloomberg.

THE e-commerce market in India is worth billions. Walmart's deal makes Bansal's success even more important, considering the fact that several analysts had literally written off Flipkart few years back after it ceded substantial market share to Amazon.

Opposing the Walmart-Flipkart deal, RSS affiliate Swadeshi Jagran Manch said in a letter to Prime Minister Narendra Modi that Walmart was using the e-commerce route to circumvent the rules to attack the Indian market.

USA e-tail giant Amazon has infused fresh capital to the tune of Rs 2,600 crore into its India unit, Amazon Seller Services, to strengthen the war-chest of the company against domestic rival Flipkart.

Flipkarts sales grew more than 50 per cent in the fiscal year ended March 31, 2018, to Dollars 4.6 billion, Walmart said.

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