Walmart-owned Flipkart to invest in grocery, last mile delivery after raising US$3.6B in latest funding round

INDIA — Flipkart, a rapidly expanding e-commerce giant backed by Walmart, has raised US$3.6 billion in the latest funding round led by Canada Pension Plan Investment.  

GIC, SoftBank Vision Fund 2, and Walmart also participated as lead investors in the funding round, doubling the Indian online retailer’s valuation to US$37.6 billion in less than three years. 

Flipkart says that the new funding round will be used to expand operations and invest further in the company’s grocery, fashion, and last-mile delivery programs. 

Like Amazon, Flipkart began by selling books but diversified rapidly into selling smartphones, clothing, and other items. It has benefited from India’s rapid smartphone adoption and cheap mobile data that helped propel growth at digital startups. 

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In 2018, U.S. retail giant Walmart bought a 77% stake in Flipkart for US$16 billion and has since expanded to small towns and cities, added more items such as furniture and grocery to its online store, and increased its warehouses in its race with Amazon.com’s India unit. 

The Bengaluru-based company is aiming for a US$50 billion valuation for its public listing as early as this year and was in talks in the United States for a deal with a blank-check firm, Reuters reported in March. 

SoftBank had sold its roughly 20% stake to Walmart as part of the 2018 deal but made a re-entry into Flipkart’s investment board in the new funding round. 

“SoftBank’s re-investment in Flipkart is driven by our experience with and conviction in the company’s management team to continue addressing the needs of the Indian consumer in the decades to come,” Lydia Jett, partner at SoftBank Investment Advisers, said. 

Flipkart’s investment comes at a time when several Indian startups have spelled out plans to go public to cash in on liquidity by foreign funds. 

Some closely watched include food delivery startup Zomato, payments services Paytm, beauty brand Nykaa and ride-hailing service Ola. 

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Jason Benowitz, senior portfolio manager at Roosevelt Investment Group noted that the investment in Flipkart is a triumph for Walmart as investors were initially skeptical of the U.S. retailer’s tie-up with the Indian e-commerce startup. 

Benowitz further noted that the success of Flipkart bolsters India as a destination for foreign investment. 

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