Walmart has tightened its grip on Flipkart by buying out hedge fund Tiger Global’s remaining stake in the Indian online retailer for $1.4 billion.
Two other minority investors — Binny Bansal and Accel — have also fully exited Flipkart by selling their shares to the American retail giant.
A report in the Wall Street Journal citing a letter sent by Tiger Global to its investors said that Walmart bought its remaining stake in the e-commerce marketplace and that the transaction values Flipkart at $35 billion, lower than the $38 billion commanded in a funding round in 2021.
Tiger Global, which held close to 4 per cent in Flipkart, said in the letter that it earned $3.5 billion on an investment of $1.2 billion in Flipkart.
Walmart reportedly purchased stakes from co-founder Binny Bansal and the venture capital firm Accel. Accel held around 1 per cent in Flipkart and Bansal, around 1.5 per cent.
Though financial details of these transactions are not available, it is learnt to have been done at a valuation of $35 billion.
``We value Tiger Global’s involvement and support over the last several years. We remain confident in the future of Flipkart and are even more positive about the opportunity in India today than when we first invested,” a spokesperson from Walmart said while confirming the deal.
“We continue to be impressed with Flipkart’s progress and remain focused on building a healthy, sustainable and profitable business for the long term, ensuring Flipkart continues to grow in an emerging and dynamic market.”
Observers said the deals not only raise Walmart’s stake in Flipkart but also show its willingness to raise its game in the country’s e-commerce sector amid competition from Mukesh Ambani’s JioMart and Amazon India.
Flipkart was co-founded by Binny and Sachin Bansal in 2007. In 2018, Walmart acquired a 77 per cent stake in the online retailer for $16 billion. While Sachin Bansal offloaded his entire holding, Binny Bansal retained a small stake. He subsequently pared his holding in 2021 when Flipkart raised $3.6 billion.
Media reports said Binny Bansal made around $1.5
billion from inception to his full exit, while the total returns of Accel stands at $ 1.5-2 billion. Walmart’s move comes at a time rival Amazon is investing an additional $15 billion in India.
The investment is expected to take its total India play across all businesses to $26 billion. This was recently disclosed by Amazon’s chief executive Andy Jassy to Indian Prime Minister Narendra Modi.