US retailer Walmart and Flipkart deal has been finalized today. Under the agreement, Walmart becomes the biggest stakeholder in the company with 77% shares valued at 16 Billion dollars. The deal values the 11-year old Indian e-commerce firm at $20.8 billion.
Walmart and Flipkart
Sachin Bansal, the co-founder, will exit the company after the deal is done. While Binny Bansal, the other co-founder will hold his position. Japan’s SoftBank, an investor, will also exit the company by selling its entire 20 percent stake in Flipkart.
SoftBank Group chief executive Masayoshi Son had earlier said that its investment in the Indian online marketplace had almost doubled. Other major investors in Flipkart include Tiger Global, Naspers and Accel while the Bansals own just over 5 percent each of the company, according to data from business intelligence platform paper.vc.
This makes Flipkart the first billion-dollar e-commerce company. It sells products across 80-plus categories with a 100 million registered users.
While the deal seems fruitful, it can’t be ignored that Flipkart is India’s biggest loss-making machine. The company hasn’t turned to profit in a single quarter. The only reason Walmart showed interest in the venture is to enter the India market.
Meanwhile, Amazon – Flipkart’s biggest rival in India – has committed to invest over $5 billion in India.
Interestingly, only 1% of Indian market does online shopping, so the valuation is far of course. Let’s see if the US retailing is able to turn tables in coming years.