Walmart invests $3.5 billion in Flipkart, stake rises to 80%
Walmart has invested $3.5 billion in the first half of 2023 to acquire shares from several non-controlling Flipkart stakeholders and settle liabilities with some PhonePe shareholders, it said in a Securities and Exchange Commission (SEC) filing. This move increased Walmart's ownership in Flipkart to about 80%, illustrating the company's aggressive bet on India's e-commerce market at a time when Amazon is scaling back its expenditures. Walmart has bought Flipkart shares from Tiger Global, Accel, Flipkart's co-founder Binny Bansal, and others.
Rivaling Amazon's reduced Indian investments
Walmart, which also owns a majority stake in PhonePe, is aggressively increasing its investment in Indian e-commerce and payment platforms. This move from the retail giant comes when companies like Amazon have reduced their expenditures. Putting this in perspective, Amazon reportedly plans to invest less than $2.5 billion in its e-commerce business in India over the next seven years. But Walmart believes both PhonePe and Flipkart will continue to demonstrate impressive growth.
Flipkart's growth fuels Walmart's confidence
In last month's earnings call, Walmart CFO John David Rainey said, "Flipkart delivered strong GMV (gross merchandise value) and net sales growth as the core business continues to grow well." He added that the team was working on enhancing the ecosystem of goods and services such as advertising, healthcare, and travel and delivering steady contribution profit improvement. Notably, Flipkart's consistent progress and performance seemingly reinforce Walmart's confidence in the long-term value of this business.
India's market continues to attract global giants
Interestingly, India has become a crucial market for global companies as they compete for their next billion customers. "We believe India offers the most attractive long-term investment appeal in our universe. Economic reforms, digitization, formalization, and rising credit penetration favor the most sophisticated, best-managed, public corporations," a recent fund letter by Baron Capital stated.
