Flipkart Secures $600 Million Investment from Walmart, Plans Operational Expansion
Three points you will get to know in this article:
- Walmart invests $600 million in Flipkart, raising its ownership to 84.6%, with potential for an extra $400 million from investors.
- Flipkart aims to use the funds to expand operations, strengthen the supply chain, and improve technological capabilities.
- Despite economic challenges, Flipkart’s fiscal year 2023 revenue hit Rs 56,012.8 crore, accompanied by losses of Rs 4,890.6 crore.
In a significant financial move, Flipkart, the leading player in the e-commerce domain, has successfully secured a substantial investment of $600 million or Rs 5,000 crore from its parent company Walmart through its investment arm, FIT HOLDINGS SARL.
The decision to raise these funds was formalized by the Flipkart board, which passed a resolution authorizing the allocation of 34,41,946 shares at a compelling issue price of $174.32 per share. This strategic move to generate $600 million or Rs 5,000 crore is evident from the regulatory filing obtained from the Singapore entity.
Major Investors and Ownership Stakes Walmart
Walmart, through its investment arm FIT HOLDINGS SARL, led the investment round by contributing an impressive $598.7 million. Additionally, the financial backing received a boost from Palomino Master, contributing $0.6 million, and Azteca Partners LLC, chipping in with $0.7 million during this successful fundraising initiative.
After securing new funds, Walmart has boosted its ownership stake to 84.6%, with Tencent and CPP Investment holding 7.1% and 2.3% shares, respectively.
Media reports suggest that the company is poised to gather a total of $1 billion, with $400 million sourced from both existing and new investors.
Utilization of Additional Capital
In a recent statement, Flipkart revealed its plans to utilize the additional capital to amplify operational reach, fortify supply chain dynamics, and enhance technological capabilities.
In a notable move, Walmart secured a commanding 77% ownership of Flipkart back in August 2018, shelling out a substantial $16 billion. Since that strategic acquisition, Walmart has further solidified its position by funneling additional investments into the company, culminating in an impressive 85% stake.
Valuation and Investor Buzz
According to estimates by TheKredible, Flipkart is now appraised at a noteworthy $32.55 billion following recent allotments. Despite the absence of a surge in valuation post-Walmart’s initial investment, there’s a buzz in the air as new and existing investors are considering injecting an additional $400 million at a premium ranging between 5-10%. This signals a potential upward trajectory for Flipkart and its stakeholders.
After nearly 30 months, Flipkart successfully secured fresh direct investments, marking a significant financial milestone. In July 2021, the e-commerce giant secured a substantial funding of $3.6 billion, spearheaded by SoftBank, elevating its valuation to an impressive $37.6 billion. Notably, the company underwent a revaluation post the separation from PhonePe, which officially announced its detachment from the e-commerce platform in December of the same year.
Secondary Investments and Ownership Expansion
In a strategic move, Walmart opted for an indirect investment by injecting $3.5 billion to acquire the remaining stakes held by Accel, Tiger Global, and Binny Bansal in Flipkart during July of the current year. This resulted in a collective divestment of approximately 6% stake by the trio. Following this secondary investment, Walmart significantly increased its overall stake, now standing at an impressive 80.5%.
Financial Performance and Growth
Despite the challenging economic landscape, Flipkart displayed resilience and reported a commendable total revenue of Rs 56,012.8 crore in the fiscal year 2023, showcasing substantial growth from Rs 51,176 crore in the previous fiscal year. It’s worth noting that the company incurred losses amounting to Rs 4,890.6 crore in the last fiscal year, reflecting a dynamic and evolving financial landscape.
Flipkart, a prominent e-commerce player, secured a substantial $600 million investment from Walmart’s FIT HOLDINGS SARL, increasing its ownership stake to 84.6%. The company anticipates a total investment of $1 billion, with a significant part from both existing and new investors. Flipkart plans to utilize the capital to enhance its operational reach, supply chain dynamics, and technological capabilities. Recent valuations estimate Flipkart at $32.55 billion, with potential for further investor injections. Despite facing economic challenges, Flipkart reported impressive revenue growth, reaching Rs 56,012.8 crore in 2023, despite incurring losses of Rs 4,890.6 crore.
