Walmart Increases Its Stake In India’s Flipkart By $3.5 Billion

(CTN News) – Walmart has spent $3.5 billion this year to acquire shares from certain Flipkart stakeholders and resolve liabilities with some PhonePe shareholders, illustrating just how aggressively it is betting on India at a time when its chief global rival Amazon is reducing its investments there.

Walmart disclosed in an SEC filing Friday for the first time that the $3.5 billion in spending was made during the first six months of 2023. Currently, Walmart owns about 80% of Flipkart, the largest e-commerce company in the world.

Tiger Global, Accel and Flipkart co-founder Binny Bansal are some of the investors who have sold their stakes in Flipkart during the past year, according to an earlier filing by Flipkart.

In its announcement earlier today, Tiger Global reported that it made an overall gain of $3.5 billion after investing $1.2 billion in Flipkart, which was its biggest win in the South Asian market to date.

Among the many companies, Walmart, which owns a major stake in PhonePe and has spent over $20 billion on the two businesses, is ramping up their investments in Indian e-commerce and payment platforms at a time when many other companies, including Amazon, have cut back their spending on these areas.

The figure above can be put into perspective by saying that Amazon plans to invest less than $2.5 billion on its e-commerce platform in India in the next seven years.

In the past decade, Amazon has invested over $11 billion into its e-commerce group and Amazon Web Services (AWS) in India, which it plans to double to $15 billion by 2030. As part of this $15 billion, Amazon has allocated $12.7 billion for its cloud business out of this total amount.

Last month, Walmart said in an earnings call that PhonePe and Flipkart continue to show impressive growth as the years go on.

John David Rainey, Walmart’s CFO, said that Flipkart delivered strong growth in GMV and net sales as Walmart’s core business continues to grow well.

“The team continues to work on expanding the ecosystem of products and services like advertising, travel, and healthcare, as well as delivering continuous improvements in the margin of the contribution. As a result of Flipkart’s consistent progress and performance, we are confident that this company has long-term value to offer.”

There is no doubt that India has emerged as a key battleground in the race to find the next billion customers for global businesses.

It has been said that India will become the new China and the fastest-growing major economy in the coming decade and beyond, according to a recent fund note released by Baron Capital.

The long-term investment appeal that India offers is the most appealing in our universe when it comes to long-term investments. Reforms in the economy, digitization, formalization, and the rise in credit penetration favor the most sophisticated, best managed public corporations in the world.”

There has been an investment of $850 million announced in recent quarters by a number of investors, including General Atlantic, Tiger Global and Walmart, for PhonePe, which has separated from Flipkart.

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