After weeks of speculation, now it’s official. Walmart Inc. has finally announced that it has signed the definitive agreement to buy 77 percent of stake in Flipkart for approximately $16 billion making it the majority stakeholder in Flipkart.
The remaining stake will be retained by some of the existing shareholders including the co-founder of Flipkart, Mr.Binny Bansal, Tencent Holdings, Tiger Global and Microsoft Corporation.
The deal values Flipkart slightly over $20 billion and is a big jump from Flipkart’s valuation of about $11.6 billion in early 2017 when it raised $1.4 billion funding from Tencent, EBay & Microsoft.
On this occasion, Walmart’s president and CEO said “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,”
Binny Bansal, co-founder of Flipkart said in a statement “This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India.”
Softbank which has invested $2.5 billion in Flipkart in August last year, is selling it’s entire stake in this round and based on the valuation, is expected to gain handsome returns on it’s investment.
Sachin Bansal, the co-founder of Flipkart is also reported to sell his entire stake as a part of this transaction.
Once the transaction is complete, the e-commerce market in India will get to see global brands Walmart and Amazon competing with each other to get a sizable chunk of the e-commerce retail market which is expected to grow to $200 billion by 2026 (source: IBEF report).