Ending months of speculation, Walmart on Wednesday announced that It has picked up 77% percent stake in India’s largest e-commerce company Flipkart for $16 billion (Rs 1.12 lakh crore). This is the largest e-commerce deal anywhere in the world. The deal valued India’s homegrown e-commerce giant at whopping $21 billion, which is an eye-popping market valuation for a young company like Flipkart. To put things in perspective, some of India’s well-known companies like software giant Wipro Ltd are valued less than Flipkart’s current market capitalization.
Here are some of the key facts of this historic deal
- Flipkart’s co-founder Sachin Bansal will make a complete exit from the company, while Binny Bansal will continue to work as Group CEO. Sachin Bansal announced about his exit on his official Facebook post.
- SoftBank, Flipkart’s largest investor before the deal, will also completely exit the company.
- Google’s parent company Alphabet Inc will pump another $1-2 billion later this year to pick up a minority stake.
- Flipkart’s other existing investors Tiger Global, Accel Partners, Tencent and Microsoft have kept their partial stake intact. South African tech giant Naspers, on other hand, has made a complete exit from the company after selling its entire 11.18% stake to Walmart for $2.2 billion.
- Walmart in future is open to other companies taking minority stake in Flipkart, but it will continue to remain a majority stake holder.
Walmart Deal ends the Bhansal era in Flipkart
Walmart’s billion dollar deal puts a curtain down on the Bhansal era in Flipkart. Sachin Bansal and Binny Bansal, the two IITians who are completely unrelated to each other, started Flipkart’s journey way back in 2007 in an unassuming 2BHK home in Bengaluru. Little did both knew that their small step will spawn out scores of inspiring entrepreneurs in the next generation and pave way for thriving Indian startup ecosystem.
Many experts claim that with Flipkart’s stellar success, Bhansals have their names in golden words in India’s entrepreneurial history. Walmart’s deal makes Bansal’s success even more important, considering the fact that several analysts had literally written off Flipkart few years back after it ceded substantial market share to Amazon.
Amazon Braces for Intense competition
Knowing very well that Flipkart will be loaded with ammunitions post Walmart, the US retail giant has already pumped in huge capital in its India business. As per the filing with Register of Companies (ROC), Amazon infused Rs 2600 crore in its Indian unit late last month.
Sources close to the matter claim that Amazon India is already busy chalking extensive plans on how to combat the rejuvenated Flipkart post Walmart deal.