Walmart, the world’s largest retailer, has finally confirmed that it is making a $16 billion investment into Flipkart for a 77 percent share of the online retailer. Tencent, Tiger Global, Microsoft and Flipkart co-founder Binny Bansal will continue to be investors in the company with this deal.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer in a statement. “As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”
The deal is still subject to regulatory approval and comes after many months of speculation about a tie-up between the two, which reached a fever pitch this morning with Softbank CEO Masayoshi Son accidentally let the news of the deal slip out in an investor presentation.
The deal sets up India as the latest battleground between Walmart and Amazon, which also had been rumored to be interested in taking a stake in Flipkart. Amazon has already invested billions into its India operations — a move that has heightened competition and even started to impact Flipkart’s own margins and valuation.
This should see a huge infusion of investment into the operations along with Walmart’s immense purchasing and logistics muscle.
“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” said Binny Bansal, Flipkart’s co-founder and group chief executive officer. “While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore.”
More to come.