Bengaluru, May 9 (IANS) In a mega deal in India’s e-commerce space, the world’s retail giant, Walmart Inc, on Wednesday announced it was buying 77 per cent equity stake in the country’s largest e-tailor Flipkart for $16 billion.
“Subject to regulatory approval in India, Walmart will pay $16 billion (Rs 1,07,662 crore at $67.3) for 77 per cent equity stake in Flipkart,” the Arkansas-based firm said in a statement from the US.
The acquisition of the majority stake makes the $500-billion Walmart the largest shareholder of the city-based Flipkart group and will help accelerate its mission to transform e-commerce through digital technology.
“The investment underscores our commitment to sustained job creation and investment in India, one of the world’s largest and fastest-growing economies,” said Walmart.
As part of the agreement, the remaining 33 per cent of the equity will be with Flipkart co-founder Binny Bansal and institutional investors Tencent Holdings Ltd, Tiger Global Management LLC and Microsoft Corporation.
“Though the focus will be on serving customers and growing the business, we will support Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future,” the statement said.
The deal will also give Walmart an opportunity to partner with the local leader in a large, fast-growing market, as the e-tailer’s leadership team will be supported by other investment and technology partners.
In an investors’ call later, Walmart Chief Executive Doug McMillon said India was a priority market for the retail giant as the country was the largest and fastest growing economy.
“As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market,” said McMillon.
The deal will benefit India in providing quality, affordable goods for customers and create skilled jobs and opportunities for small suppliers, farmers and women entrepreneurs.
“India is one of the most attractive retail markets, given its size and growth rate and our investment is an opportunity to partner with Flipkart that is leading transformation of e-commerce in the market,” he said.
Observing that Walmart’s investment was significant and would help fuel the e-tailer’s ambition to deepen its connection with buyers and sellers, Bansal said though e-commerce was a small part of the country’s retail sector, he saw a great potential to grow.
“Walmart is the ideal partner for the next phase of our journey and we look forward to working together to bring our strengths and learnings in retail and e-commerce to the fore,” he said.
Founded in 2007, Flipkart has led the e-commerce revolution in the sub-continent, growing rapidly and earning customer’s trust with digital technology including artificial intelligence to hard-sell a wide range of goods spanning electronics, appliances, mobile, fashion and apparel.
Walmart statement said: “As a company, we are transforming to meet the needs of customers and look forward to working with Flipkart to grow in this critical market. We are confident of providing the e-tailer strategic and competitive advantage.”
With platforms such as Myntra, Jabong and PhonePe, Flipkart is positioned to leverage its integrated ecosystem, which is defined by localized service, insights into customers and an efficient supply chain.
The supply chain arm, eKart, serves 800 cities, making 5,00,000 deliveries daily.
In fiscal 2017-18, Flipkart recorded Gross Merchandise Value (GMV) of $7.5 billion and net sales of $4.6 billion, representing 50 per cent year-over-year growth.
Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength, while its talent, technology, customer insights and innovative culture will benefit the US retail giant in India and the world over.
Post-acquisition, both the partners will leverage their strengths but will maintain their distinct brands and operating structures.
“We operate 21 best price cash-and-carry stores and one fulfilment centre in 19 cities across nine states, with 95 per cent of sourcing from the country, aiding suppliers, creating skilled jobs and contributing to local economies,” said Walmart India Chief Executive Krish Iyer in the statement.