Walmart Increases Its Stake In India's Flipkart With $3.5 Billion Investment

U.S. retail giant Walmart has increased its stake in Flipkart, India's largest e-commerce marketplace operator, after buying $3.5 billion worth of shares in the company.

In a recent U.S. Securities & Exchange Commission (SEC) filing, Walmart noted that it acquired shares from the company's non-controlling interest holders, including Flipkart co-founder Binny Bansal, Accel Partners and Tiger Global.

Walmart also clarified that a portion of its $3.5 billion investment was put in to "settle the liability to former noncontrolling interest holders of PhonePe."

"During the six months ended July 31, 2023, the company paid USD 3.5 billion to acquire shares from certain Flipkart non-controlling interest holders and settle the liability to former noncontrolling interest holders of PhonePe," the Bentonville, Arkansas-based retailer disclosed the filing.

In July, Walmart paid $1.4 billion to buy investment firm Tiger Global's remaining stake in Flipkart to strengthen its control in the Indian retailer. The transaction took the Indian e-commerce giant's valuation to $35 billion, Bloomberg reported, citing a letter sent by Tiger Global to investors.

Walmart acquired a 77% stake in Flipkart for $16 billion in 2018 after months of negotiations. It was dubbed as India's largest acquisition and the world's biggest purchase of an e-commerce company at the time. With the new investment, the American retail giant increased its stake to about 80% in Flipkart.

"India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of eCommerce in the market," Doug McMillon, Walmart's president and chief executive officer, said in a previous statement.

Based in the southern Indian state of Karnataka, Flipkart launched in 2007 with an initial focus on selling books. Over the next few years, the platform expanded into different e-commerce sectors through a series of acquisitions. In 2014, it purchased the online electronics store Letsbuy and two years later, it spent $280 million to acquire fashion retailer Myntra.

Flipkart acquired PhonePe, a popular mobile payments service in India, through a $20 million acquisition in 2016. After acquiring Flipkart, Walmart separated the mobile payments provider into a separate entity while continuing to maintain a controlling stake.

Walmart and Flipkart noted that they are in discussions to engage more investors. It was previously reported that Google's parent Alphabet was in talks with the two companies to invest $1-2 billion in the Indian e-commerce platform.

With Flipkart's acquisition, Walmart is aiming to amplify the capacity of the merchandise it sells in international markets over the next five years. The company is looking to attain a gross merchandise volume of $200 billion in international markets by 2028.

This comes as Walmart's rival Amazon is making major investments in India to expand its foothold in the country's e-commerce landscape. In May, Amazon announced plans to spend $12.7 billion on local Amazon Web Services data centers.