It finally happened, what eventually had to happen; Walmart now officially owns most of Flipkarts’s shares, making the retail giant the majority owner of the Indian e-commerce platform. The announcement came on August 18, where Walmart gave an official statement declaring ‘the closing of the agreements for Walmart to become the largest shareholder in the Flipkart Group.’ Walmart now owns 77 percent of Flipkart’s share, which it did by buying out primary investors. This is Walmart’s one colossal step in rivaling Amazon and capturing the vast e-commerce market that India promises. The deal between Walmart and Flipkart was announced way back in May 2018 and after which Flipkart let go off its holdings of eBay last month.
This deal also indicates that Flipkart might have to go public and file an IPO within four years from now, an indication that was reported by Reuters three months ago. While 77 percent of Flipkart is owned by Walmart the rest is still owned by Binny Bansal and other shareholders. They will continue to run the show including Tencent and Tiger Global Management LLC presiding as board members. Other than Flipkart’s co-founder Binny Bansal and Microsoft Corp the other two are still part of Flipkart’s investor circle and members of the board. Google was also believed to be one of the investors in the deal but that did not materialize in the end. Walmart is also investing $2 billion of equity funding to help accelerate Flipkart’s business in India.
Judith McKenna, CEO and president of Walmart International said, “Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart.” Walmart believes its investment will benefit Indian market by providing more valuable and affordable goods and creating skilled jobs and opportunities for suppliers.
Walmart also has other interest in its acquisition of Flipkart’s majority shares, as expressed by McKenna in May, “Not only is [Flipkart] innovative [with the] problem-solving culture that they have, but they are doing some great work both in the AI space, how they are using data across their platforms but particularly in terms of the payment platform that they’ve created through PhonePe. All of those things we can learn from for the future and see how we can leverage those around the international markets and potentially into the US as well.”
Flipkart’s annual earnings will also be reported along with Walmart’s in US, making it more transparent and immune it from direct scrutiny.
