Tencent increases its stake in Flipkart with fresh infusion of $62.8 Mn

Tencent has invested $62.8 million in Flipkart through the Indian e-commerce giant’s Singapore-based parent entity Flipkart Pte, regulatory filings show. The fresh infusion is likely a part of Flipkart’s $1.2 billion round that was led by Walmart in July this year. 

Walmart had already infused $660.25 million across two tranches in July. In the same month, Qatar Investment Authority had also invested $8.14 million, regulatory filings show. With the latest funding tranche, Flipkart has raised a total of $731.20 million in 2020. 

Assuming that the latest investment is a part of the round, the remaining tranche of $469 million is yet to be raised. As per Fintrackr’s estimation, the Doug McMillon-led retail conglomerate owns 81.87% of Flipkart worth $18.9 billion and the e-commerce marketplace has been valued at around $23 billion after the fresh allotment.

Tencent remains the second-biggest shareholder in the e-commerce marketplace, increasing its stake from 5% to 5.34% and worth $1.21 billion post the latest investment made through its subsidiary Aceville.

The capital infusion from the Chinese tech giant in Flipkart has come at a time when India and China are locked in a fierce border standoff in the Ladakh region. When the first incidents were reported, the Indian government took steps to counter and check the growing incidence of China-backed funds and firms investing in Indian startups. 

The Indian government amended its FDI policy to stop investments in Indian firms and startups via the automatic route from entities based in bordering countries, especially with an eye on China. It also banned several Chinese and China-linked apps, a move seen as making India self-reliant in many fronts. 

While Tencent might have chosen Singapore to bypass the new rules and compliance for its latest investment in India, its recent investment in music and podcast streaming app Gaana was done via debt through its European subsidiary Tencent Cloud. Importantly, this is the fourth investment from Tencent in the Indian internet space this year with investment in bookkeeping software firm Khatabook and Pratilipi too.

The new infusion is crucial for Flipkart as the company has been gearing up for its best two business months in the year - October and November. Both Flipkart and Amazon have been recording bumper sales the past 4-5 years during these two festival months in India.

Tiger Global remained the third-largest stakeholder controlling 4.84% worth $1.1 billion as per Fintrackr’s estimate. Microsoft Global Finance and Qatar Investment Authority stakes were worth $328.3 million and $323.7 million respectively.  

Flipkart’s maiden institutional investor Accel still controls a 1.31% stake valued at $297.65 million.