Walmart Inc-owned Flipkart on Monday withdrew SoftBank Group Corp as an investor in a $3.6 billion funding round, valuing the Indian online retailer at $37.6 billion in less than three years and before its expected market debut.
The US retail giant Wallmart bought a 77% stake in Flipkart for $16 billion in 2018 and has since expanded into smaller towns and cities, adding more items such as furniture and grocery to its online store and increasing its warehouses to race with Amazon India unit.
The Bengaluru-based company is targeting a $50 billion valuation for its public listing earlier this year and was in talks in the United States for a deal with a blank-check firm, Reuters reported in March. Nearly $800 million of the latest funding came from the Canada Pension Plan Investment Board. GIC, SoftBank Vision Fund 2, and Walmart were also among the major investors.
Lydia Jett, the partner at SoftBank Investment Advisers, said, “SoftBank’s re-investment in Flipkart is driven by our experience with and conviction in the company’s management team to continue addressing the needs of the Indian consumer in the decades to come”.
Like Amazon, Flipkart started out by selling books but quickly diversified into selling smartphones, clothing, and other items. It has benefited from India’s rapid smartphone adoption and cheap mobile data that has helped drive growth in digital startups.
Flipkart said the new capital will be used to expand operations and further invest in the company’s grocery, fashion, and last-mile delivery programs, which currently have over 350 million registered users.
Jason Benowitz, senior portfolio manager at Roosevelt Investment Group, said, “It is a triumph for Walmart as investors were initially skeptical of the U.S. retailer’s tie-up with Flipkart”.
Several Indian startups are planning to go public to capitalize on liquidity by foreign funds. Food delivery startup Zomato, payment services Paytm, beauty brand Nykaa, and ride-hailing service Ola were some of the closely watched. Twenty-two companies have started this year till July 9. According to data from Refinitiv, India had $3.6 billion worth of IPOs in the first half of 2021, up from $1.1 billion in the same period last year.
Source: Reuters