Walmart may double Flipkart valuation to $20 billion for a major stake.
Walmart could spend anywhere between $5-10 billion if the offer to buy a large stake finds favour with Flipkart, making it one of the largest cross-border deals in India, according to news reports.
If the deal goes through, the world’s largest offline retailer will own a substantial stake in Flipkart. This will help Flipkart in its fight against Amazon India and Walmart against Amazon in US and the world.
At present, SoftBank is the largest shareholder in Flipkart with a 23.6% stake followed by Tiger Global with 20.5% and Naspers with 13%. Founders Binny and Sachin Bansal hold around 10%. SoftBank invested $2.5 billion into Flipkart in August 2016 and it is not expected to pare down the shareholding.
In November 2017, SoftBank offered to buy Flipkart shares at up to $10 billion valuation. It sought to acquire shares from Flipkart investors, including Tiger Global, Accel, Kalaari Capital and IDG Ventures, and employees.
Walmart entered the e-commerce business by acquiring American e-commerce company Jet.com in August 2016.
Walmart is firming up its interest in Flipkart almost eighteen months after the talks first began between the two companies. “Post the diligence, Walmart’s offer involves one-fifth in primary capital with the rest of the transaction being secondary sale of shares to Walmart by existing investors. Walmart wants to start ahead of Amazon and India will be the only market where it can possibly do that by investing in Flipkart, which is being valued at $18-20 billion,” a person privy to the details of the deal said.