Walmart eyes Rs 2,117 billion Indian e-commerce pie with over 40% stake in Flipkart

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The battle for India’s fast-growing e-commerce pie, estimated to cross the 2,117 trillion rupees this fiscal year according to the latest Economic Survey, is about to become more fierce in the coming days. The world’s largest retailer, Walmart Inc, is considering a more than 40 percent stake in Flipkart, a child e-tailing poster from India, and is reportedly willing to shell out up to $ 10 billion for it. .

In what would be one of its biggest deals abroad, the US retailer is looking to buy new and existing shares in Flipkart, possibly a majority stake, and due diligence is likely to start next week, two people familiar with the Reuters affair . A senior Walmart official was in India recently and sources say he was also at the Flipkart office in Bangalore during the visit. “For Walmart, India is an exciting and priority market, and our Global CEO Doug McMillon was in the country for India Business Review for its three entities, India Cash & Carry, Global Technology Center and Global Sourcing,” said a Walmart India spokesperson. but he declined to comment on “market speculations”.

Although the terms under discussion were not immediately available, Flipkart would be valued at more than the $ 12 billion figure given when Japan’s SoftBank Group Corp took about a fifth of the company last year for $ 2.5 billion. Some media reports have even linked the value at around $ 20 billion.

Both companies can earn a lot if this long-speculated agreement materializes. While Walmart manages to gain a foothold in India’s burgeoning e-commerce industry, Flipkart not only adds more financial muscle, it also strengthens the supply chain and improves efficiency in the acquisition and variety of products. In addition, the agreement would allow them to pool resources to compete against Amazon, in online and offline retail channels.

Although Walmart has forged new alliances in the USA. UU -like the acquisition of Jet.com in 2016- to face Amazon, based in Seattle, Flipkart has participated in a face-to-face competition against Amazon India locally. Flipkart has reinforced its war chest with funding of approximately $ 4 billion this fiscal year. In addition to the funds raised from SoftBank, Tencent, Microsoft and eBay have generated about $ 1.4 billion. On the other hand, regulatory filings with the Companies Registry in November 2017 show that Amazon India has issued a paid-in capital of $ 2.7 billion for Amazon Seller Services, its market arm.

Then there is the relatively new Paytm E-commerce Pvt Ltd, which should not be taken lightly, as it is backed by Alibaba Group Holding Ltd. of China. It is likely that the rat race becomes more crazy here. The market research provider Euromonitor expects that around half of India’s population will be online by 2021, and most will come from rural areas and smaller cities, when the size of the Internet retail market will rise to about 4,000 crore. Who would not want a slice of this cake?