Virendra Pandit
Mumbai: A major shifting of buyers’ preference from the physical to the digital platforms in pandemic-induced India is reflected in the big-ticket funding patterns involving e-commerce platforms, which also show the post-Covid potential of the country’s huge market size and India’s positive growth story.
On Monday, reports came that India’s indigenously born e-commerce major Flipkart Group, now valued at USD 37.6 billion post-money as part of Walmart, has successfully raised USD 3.6 billion in funding in a round led by international groups including Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2, and Tiger Global.
The USA’s Walmart had, last July, led a USD 1.2-billion round in Flipkart, valuing the firm at USD 24.9 billion. Walmart bought it for USD 16 billion in 2018 and is now engaged in fierce competition with Amazon and Reliance’s JioMart for dominance in India’s vast online retail market, media reported on Monday.
Walmart was also part of the latest investment round in Flipkart.
According to analysts, the new financing round elevates Flipkart among the 10 largest e-commerce companies in the world in terms of valuation, such as Amazon, Alibaba, Shopify, Garena, and Pinduoduo.
“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value,” said Kalyan Krishnamurthy, CEO, Flipkart Group.
“This investment round by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximize this potential for all stakeholders.”
One of the key investment themes for CPP Investments has been Asia’s domestic consumption. “We believe India will be a leading source of global growth in the decades ahead, supported by positive demographics, a growing middle class, and deepening Internet penetration,” said Agus Tandiono, Managing Director and Head of Fundamental Equities Asia, CPP Investments.
Masayoshi Son-led SoftBank had invested in Flipkart three years after it sold its entire stake in the company to Walmart, the world’s largest retailer. Before its exit in 2018, SoftBank had earlier invested USD 2.5 billion in Flipkart, the reports said.
Judith McKenna, President, and CEO of Walmart International said Flipkart is a great business whose growth and potential mirrors that of India as a whole.
Industry sources said that the funding would provide leverage for Flipkart’s plans to go public in the US by 2022. According to analysts, it would also help Flipkart compete with big players like Amazon, Reliance’s JioMart, and Tata Group in India.
Recently, the Tatas announced the acquisition of e-grocery firm BigBasket. Cementing its foray into the online grocery market, Tata Sons, through its subsidiary Tata Digital, has acquired a majority stake in BigBasket at a USD 2 billion valuation.
Amazon has also committed over USD 6.5 billion to the Indian market. It has been scaling up its investments in the country at a time when the Seattle-headquartered firm had withdrawn from China.
With more than 350 million registered users from across the country, Flipkart has been investing in key categories, including fashion, travel, and grocery.
More than 300,000 registered sellers from across the country are on Flipkart’s marketplace, and 60 percent are from tier 2 cities and beyond. Flipkart also works with more than 1.6 million kiranas in India through its wholesale business and its last-mile delivery program. The group is a majority shareholder in PhonePe, a payments app with more than 300 million users.
J.P. Morgan Securities (Asia Pacific) Limited and Goldman Sachs & Co. LLC served as placement agents to Flipkart in connection with this transaction, Hogan Lovells and Shardul Amarchand Mangaldas & Co served as legal counsel.
