Blockbuster exits underway as Walmart investment deal with Flipkart nears

The poster child of Indian e-commerce market Flipkart is said to be in the last leg to clinch the largest investment deal with Walmart. The global retail giant is likely to pick up 20-26 per cent stake in the Bengaluru-based company. It may increase shareholding to 51 percent, reports TOI citing sources.

Walmart will invest $1-2 billion in acquiring primary shares of Flipkart while a major chunk of investment is slated to buy secondary shares from existing investors.

Flipkart’s early backers Tiger Global and Naspers will cash out if the deal gets through. Importantly, SoftBank is also looking for a partial exit as the worth of its investment in the company has doubled within seven months of investment.

SoftBank has picked up 23.6 percent stake after infusing $2.5 billion in Flipkart.

During the recent secondary buyout, Flipkart was valued in the range of $17-19 billion. Tiger Global had reportedly diluted its 2.2 per cent stake for about $424 million. Besides Naspers, the Lee Fixel-led hedge fund will sell out a significant part of its holding to the retail giant.

Currently, Tiger Global holds 22.44 per cent of preference share capital in Flipkart while South Africa-based media and Internet conglomerate has about 14.57 per cent of preference share capital.

The Doug McMillon-led retail giant will have to invest $10 to 12 billion for owning the largest chunk of Flipkart. If the Walmart-Flipkart deal materialises, it will herald the largest exit provided by any Indian startup ever.

The exit of Tiger Global and Naspers with multiples on the invested amount is a healthy sign for the Indian startup ecosystem where the exit is hard to come by.

Such transactions increased the confidence of many large and strategic investors eyeing Indian startups for investment.

The Walmart’s probable investment in Flipkart will also extend its arch rivalry with Amazon on Indian soil. Amazon has been cannibalising retail major’s market share on home turf- the US for over a decade. With a multi-billion bet on Flipkart, Walmart is targeting to build strong anti-Amazon alliances in India.

With Walmart throwing its hat in Indian e-commerce space, the fledgling e-commerce market is becoming hottest destination for large strategic investors such as Alibaba, Tencent, Walmart, and SoftBank.