Walmart's big bet on India: USD 1.4 billion deal to buy out Tiger Global's stake in Flipkart

Walmart increased its influence over Indian e-commerce company Flipkart by purchasing Tiger Global's remaining shares, valuing the Indian business at around USD 35 billion.

On Monday, Walmart (WMT.N) has further increased its influence over the Indian e-commerce company Flipkart by purchasing the remaining shares held by the hedge funds Tiger Global and Accel. According to a statement the fund delivered to investors, Walmart just paid USD 1.4 billion to purchase the last of Tiger Global's Flipkart shares, valuing the Indian business at approximately USD 35 billion.

Flipkart was valued at close to USD 38 billion in 2021. This is a strategic move by Walmart to consolidate its position in the Indian e-commerce market. However, this is still a significant valuation for Flipkart, and it shows that Walmart is confident in the company's future.

On Monday, a Walmart representative acknowledged that the firm acquired additional Flipkart shares from a number of investors, including Tiger Global, but declined to share any financial details. In 2018, the American retailer made its largest investment when it acquired a 77 per cent interest in Flipkart for nearly USD 16 billion. What Walmart's ownership interest was following the acquisition was not immediately apparent.

Contrary to competitor Amazon, which has a more metropolitan concentration, Flipkart has expanded to become one of India's top online marketplaces by concentrating on small towns and cities. Similar to Amazon, Flipkart started out by selling books before quickly branching out to sell consumer gadgets, clothing, food, and housewares. It also provides services like online prescription ordering and trip booking, and like other digital businesses, it has profited from India's quick adoption of smartphones and affordable mobile data.

The deal is a win-win for both companies. Walmart gets a bigger foothold in the rapidly growing Indian e-commerce market, while Flipkart gets access to Walmart's vast resources and expertise. The deal is also a sign of the growing competition in the Indian e-commerce market. Amazon is already a major player in the market, and other companies, such as Reliance Retail, are also making investments in e-commerce.

Flipkart had double-digit revenue growth in the most recent quarter that concluded on April 30, helped by additional customers in some locations and a 50 per cent increase in ad sales, according to Walmart.

In recent months, executives have singled out Flipkart as a significant factor in achieving Walmart's goal of tripling the number of gross products it sells abroad to USD 200 billion in five years.

The Indian e-commerce market is expected to grow significantly in the coming years, and this deal is a sign that Walmart is serious about competing for market share. Overall, this is a positive development for both Walmart and Flipkart. It is a sign of Walmart's commitment to the Indian market, and it is likely to help both companies to grow their businesses in the years to come.

Walmart stated in a statement, “We remain optimistic about Flipkart's future and are much more optimistic about the possibilities in India now than when we originally invested.”