In a significant move to expand its presence in the Indian e-commerce market, retail giant Walmart has paid $1.4 billion to buy out Tiger Global’s remaining holdings of Flipkart shares. This strategic transaction took place in recent days, and Tiger Global, having previously cashed most of its Flipkart shares, reported a remarkable gain of $3.5 billion on its initial investment of $1.2 billion, according to sources familiar with the matter. The Wall Street Journal was the first to report on this deal.
Notably, Flipkart is the only Indian startup in which Tiger Global had invested more than $1 billion, underlining the company’s confidence in the potential of the Indian e-commerce ecosystem. Tiger Global has been a prominent player in the Indian startup landscape, having invested over $6 billion in various Indian startups. Its investment in Flipkart played a significant role in catalyzing the growth of the Indian startup community and elevating India’s tech ecosystem to international prominence.
The recent secondary sale of Flipkart shares valued the Bengaluru-based e-commerce giant at an impressive $35 billion. In a funding round in 2021, Flipkart was valued even higher at $37.6 billion. However, it has since internally adjusted its valuation, reducing it by approximately $5 billion following the demerger of payments startup PhonePe.
Walmart’s involvement with Flipkart dates back to 2018 when the American retail behemoth acquired a 77% stake in the company for $16 billion. As of last year, Walmart still held a significant 72% share in Flipkart, while Tiger Global owned a 4% stake before the recent transaction.
One can view Walmart’s substantial investment in Flipkart as a strategic move to counter the competition posed by Amazon’s local division in the Indian e-commerce space. Amazon was able to establish a similar business within its ranks for a comparatively lower cost of around $7 billion.
A spokesperson for Walmart expressed strong confidence in the future of Flipkart, emphasizing that the retail giant remains optimistic about the current opportunities in India, even more so than when they initially invested.
Given Flipkart’s ambitious growth plans and the need for additional capital, it is expected that the funding efforts for the company will continue in the foreseeable future. Having largely utilized the capital raised in 2021, Flipkart now faces the requirement for another round of funding. While the company explored market interest in recent months, no deal materialized due to a lower valuation. Consequently, it is likely that Flipkart will turn to Walmart to secure the majority of the financing needed for its next round of expansion.
