Flipkart’s reported $10 billion IPO plan will mean Walmart’s investment in the Indian e-commerce giant will double within 3 years

Flipkart’s reported $10 billion IPO plan will mean Walmart’s investment in the Indian e-commerce giant will double within 3 years

• Walmart is planning a $10 billion Flipkart IPO, valuing the Indian e-commerce giant at $40 billion.
• At this valuation, Walmart’s investment in the Indian e-commerce giant would nearly double since it acquired Flipkart in 2018 for $16 billion.
• Walmart has roped in investment bank Goldman Sachs to explore the Flipkart IPO plan, according to a Mint report.
• Earlier in July this year, Flipkart raised $1.2 billion in a fresh round of funding, valuing the company at $24.9 billion. This round was led by Walmart.

The much-anticipated Flipkart IPO (initial public offering) could soon be a reality. US retail player Walmart is reportedly gearing up to float a $10 billion Flipkart IPO in the US, divesting up to 25% of the stake in the Indian e-commerce player.

According to a Mint report, Walmart has roped in investment bank Goldman Sachs to explore the Flipkart IPO plan. Business Insider has reached out to Flipkart for a statement and is awaiting a response.

A $10 billion IPO would value Flipkart at $40 billion. This is 20% lower than the $50 billion valuation that was expected earlier in September.

However, at a valuation of $40 billion, Walmart’s investment would nearly double – it acquired Flipkart in 2018 at $16 billion for a 77% stake. At the time of its acquisition, Walmart pledged to take Flipkart public within four years.

At the moment, Walmart’s stake in Flipkart stands at 82.3%, with Tiger Global, Tencent, Accel Partners, and Microsoft being the other key investors.

Earlier in July this year, Flipkart raised $1.2 billion in a fresh round of funding, valuing the company at $24.9 billion. This round was led by Walmart.

Flipkart going public will allow minority shareholders to pare their investments or make an exit.

Riding the Indian e-commerce boon

Walmart’s plans to take Flipkart public could have been bolstered by the surge in e-commerce sales since the COVID-19 pandemic broke out. The massive surge in e-commerce sales is corroborated by Flipkart’s own statistics - the e-commerce giant witnessed a ten-fold increase in its shipments during its festival sale this year.

On an acquisition spree

In addition to witnessing a massive surge in orders this year, Flipkart is also on an acquisition spree. From augmented reality startups to fashion companies, the e-commerce giant has been busy this year.

After acquiring Walmart’s India operations this year, Flipkart also dabbled in the social gaming and augmented reality spaces with the acquisitions of Mech Mocha and Scapic.

It has also made a few investments in the fashion space, including USPL which houses Virat Kohli’s Wrogn. It has also invested in Aditya Birla Fashion Retail and Arvind Fashions.

Flipkart is also expanding its partnerships with kiranas (the Hindi word for mom and pop stores), which delivered over 3.5 million orders during the Big Billion Days sale this year.

Source: BusinessInsider