Walmart pays $3.5Bn to buy out existing Flipkart shareholders, increases stake to over 80%

In a strategic move, American retail giant Walmart revealed that it has spent a total of $3.5 billion over the first six months of this year in order to acquire additional stake in Flipkart from non-controlling stakeholders. This substantial investment includes the purchase of shares held by co-founder Binny Bansal, as well as investments by prominent entities like Accel and Tiger Global Management. Walmart revealed this development in a filing with the Securities and Exchange Commission (SEC).

This move comes after several key players, including Binny Bansal, Accel, Tiger Global Management, and Franklin Templeton, decided to fully exit their investments in Flipkart by selling their stakes to Walmart. Certain senior and long-term employees also cashed in on the ESOPs, by selling them to Walmart. These transactions over the past half year, have taken Walmart’s ownership in Flipkart to about 80%.

“During the six months ended 31 July 2023, the company paid $3.5 billion to acquire shares from certain Flipkart non-controlling interest holders and settle the liability to former non-controlling interest holders of PhonePe,” Walmart said in its filing with the SEC. “Additionally, during the six months ended 31 July 2023, the company received $0.7 billion related to new rounds of equity funding for the company’s majority-owned PhonePe subsidiary.”

Walmart’s association with Flipkart is a long one. One can trace it back to 2018, when the American giant acquired a majority 77% stake in the Indian e-commerce giant for a whopping $16 billion. Over the years, Walmart’s ownership stake has seen minor fluctuations, but it currently stands at a little over 80 percent, according to data available on Tracxn, a private market data provider. This investment has been instrumental in Walmart’s presence in the rapidly growing Indian e-commerce market.

Accel, an early investor in Flipkart, played a pivotal role in the company’s growth. It initially held more than 20% in Flipkart when it first invested in 2008. Over time, its stake was reduced to about 6% before Walmart’s majority share acquisition in 2018. Accel’s exit from Flipkart has generated impressive returns of approximately $1.5 billion to $2 billion, reflecting an exceptional return on its initial investment of about $60 million to $80 million. Tiger Global Management, another key player in Flipkart’s journey, held a stake of 4.7% in the company. Its decision to sell its shares resulted in significant gains, totaling around $3.5 billion, making it one of its most profitable investments in the South Asian market, according to media reports.

India has emerged as a battleground for global firms seeking to capture the next billion customers. If you have been following us, then you are aware that companies like Walmart, Apple, and Tesla are betting big on India’s growth story, and the retail landscape in India is fiercely competitive. Walmart’s substantial investment in Flipkart comes at a time when the likes of Amazon are scaling back their investments in India, leaving the field wide open for the likes of Walmart. While Walmart has invested $3.5 billion in Flipkart’s remaining stakes this year, Amazon, its global rival, plans to invest less than $2.5 billion in its Indian e-commerce platform over the next seven years.

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