INDIA – Walmart is considering raising US$2-3 billion at a valuation of more than US$40 billion for Flipkart, an Indian e-commerce company it owns, to expand its product range in India and challenge rivals, said a news report quoting sources.
One of the two sources told Mint that the American multinational retail corporation may prefer to bring strategic investors into Walmart-Flipkart through this fundraising, unlike in the last round. However, Walmart-Flipkart is also open to selling to large pure-play investment firms.
In the last round, which was its first capital infusion round that happened in July last year, Flipkart raised approximately US$3.6 billion.
An estimate of about US$700-800 million of this capital remains, according to the two people cited above told Mint.
“Walmart is keen to bring in strategic investors in Walmart-Flipkart so that Flipkart can get additional expertise as well as consistent funding support as and when required to stay ahead in the country’s e-commerce competition,” the first person said, requesting anonymity, as quoted by Mint.
As part of Walmart’s latest fundraising plan, investment bankers will seek out strategic partners and large global investors, however, Walmart is yet to formally mandate them to take up the move.
The funds from this round could be used not only for adding resources, such as fulfillment centers (storages and warehouses), new businesses and workforce but also for potential acquisitions in the Indian e-commerce space,” the first person said, as quoted by Mint.
The planned fundraising will help Flipkart build a war chest to compete with aggressive rivals Amazon India, Reliance Industries’ Jio Mart, and the Tata group
In response to speculation, Walmart declined to comment but a Flipkart spokesperson said there are no such plans at the moment, and the news is inaccurate and speculative.
The e-commerce firm estimated that Flipkart’s current value is over US$40 billion, and it may dilute around 7 percent if it raises as much as US$3 billion, according to those cited above.
Walmart acquired a 77 percent stake for US$16 billion in 2018, becoming its biggest deal ever – and said later that year that it could take the company public in four years.
Since Walmart acquired Flipkart, the company has expanded to newer locations in India and added new product categories.
Flipkart now sells a full range of groceries and furniture on its platform, for example. New warehouses have also been added by the e-commerce company to facilitate faster delivery.
In addition to offering Flipkart Pay Later services, Flipkart has also opened a research and development (R&D) center in Israel since acquiring Israeli startup Upstream Commerce.
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