Flipkart raises $3.6 billion, valuation rises to $37.6 billion

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FILE PHOTO: The logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. REUTERS/Danish Siddiqui/Illustration

Desi e-commerce giant Flipkart has raised $3.6 billion in new funding round, its first capital infusion from external investors as US retailing Behemoth Walmart acquired it for $16 billion in 2018.

The start-up founded by fundraising Sachin and Binny Bansal is expected to give significant firepower to expand online shopping and take on well-capitalized rivals like Amazon Inc, Reliance Industries, and Tata Group.

The round was led by Canada Pension Plan Investment Board (CPP Investments), Singapore Government Sovereign Wealth Fund GIC, Japan’s SoftBank Vision Fund 2, and Flipkart’s largest shareholder Walmart with the participation of existing supporters like Qatar Investment Authority.

The company will be valued at more than $37.6 billion, up from $24.9 billion last year, when it raised $1.2 billion in an internal round led by Walmart. Flipkart was priced at $22 billion three years ago.

Sovereign funds like Disrupted, Treasure National BHD, and marquee investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton, and Tiger Global also participated in the fundraising, e-Taylor said in a statement on Monday.

Walmart expects to hold about 74%-75% stake in Flipkart after the funding round.

Sources said Flipkart will also buy back employee shares worth more than $80 million which will provide liquidity to employee stock ownership plans (Esops).

Capital Allocation: Grocery in Focus

Flipkart will use the fresh capital to expand operations and gain market share at a time when the Covid-19 epidemic in the Indian online retail market is witnessing rapid traction.

Investments in Grocery and Flipkart’s technology stack will be inconsistent compared to other segments. Flipkart’s increased focus on grocery comes amid growing demand for essentials online thanks to the virus outbreak.

According to a report by PGA Labs, market intelligence unit of The Praxis Global Alliance, the online grocery market is estimated to touch $22 billion by 2025. Tata-owned BigBasket is the largest player in space with around 37% market share, followed by Amazon India, Grofers, Flipkart, Reliance’s JioMart, and others, Said Praxis Data.

Food delivery app Zomato also said last week that it plans to relaunch its grocery marketplace service. Swiggy is also working in space through Instamart and Supra Daily.

Gunfire battle amid policy reshuffle

Flipkart’s latest fundraiser comes at a time when traditional Indian groups like Reliance and Tata are planning to expand their new ventures in the e-Commerce space, and rival Amazon is also continuing with its India investment plans.

Amazon’s India VP (Consumer Business) Manish Tewari had recently told ET that e-Taylor does not expect any major changes in its investment strategy due to recent policy proposals for the sector in India and will continue to expand operations in the country. Amazon has already invested more than $7 billion in India.

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