Flipkart, which is owned by Walmart Inc, welcomed SoftBank Group Corp (9984.T) back as an investor in a $3.6 billion investment round on Monday, more than tripling the Indian online retailer’s valuation to $37.6 billion in less than three years and well ahead of its projected stock market debut.
In its competition with Amazon.com’s (AMZN.O) India branch, Walmart (WMT.N) bought a 77 percent interest in Flipkart for $16 billion in 2018. Since then, it has expanded to small towns and cities, added additional things like as furniture and groceries to its online store, and grown its warehouses.
According to Reuters in March, the Bengaluru-based company is aiming for a $50 billion valuation for its public debut this year and was in talks with a blank-check firm in the United States.
The Canada Pension Plan Investment Board provided $800 million of the current funding. The lead investors included GIC, SoftBank Vision Fund 2, and Walmart.
Lydia Jett, partner at SoftBank Investment Advisers, said, “SoftBank’s re-investment in Flipkart is driven by our experience with and faith in the company’s management team to continue addressing the requirements of the Indian consumer in the decades to come.”
As part of the 2018 agreement, SoftBank sold a roughly 20% share to Walmart.
Flipkart, like Amazon, began by selling books but quickly expanded to include cellphones, apparel, and other things. It has profited from India’s increasing smartphone use and low-cost mobile data, which has aided digital startup growth.
Flipkart said the fresh funds will be used to grow operations and spend more in the company’s food, fashion, and last-mile delivery services, with over 350 million registered consumers.
“It’s a victory for Walmart,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group, “since investors were initially dubious of the U.S. retailer’s tie-up with Flipkart.”
He went on to say that Flipkart’s performance bolsters India’s appeal as a foreign investment destination.
Several Indian firms have announced ambitions to go public in order to take advantage of foreign capital’ liquidity. Zomato, a food delivery service, Paytm, Nykaa, and Ola, a ride-hailing service, are among the companies being attentively monitored.
As of July 9, twenty-two companies had made their debut. According to Refinitiv statistics, there were $3.6 billion worth of IPOs in India in the first half of 2021, up from $1.1 billion at the same time previous year.
This year’s level has been the highest since 2008.
Source: Reuters