Retail giant Walmart has announced a planned acquisition of 77 percent stake in Flipkart, the giant Indian e-commerce and listings company, for $16 billion. Tiger Global, SoftBank and Naspers are among the investors who raked in big gains in the wake of the mega deal.
The deal has been in the works off and on for two years, with both Walmart and Amazon vying to buy Flipkart. A joint news release from Walmart and Flipkart confirmed the deal yesterday, laying all the rumors to rest. The acquisition will value Flipkart at nearly $21 billion.
New York-based investment firm Tiger Global is to reap profits of $3 billion on a total investment of about $1 billion. Tiger was one of the earliest investors in Flipkart, tracing back to an investment of $9 million in 2009. After selling a minority stake to SoftBank earlier, Tiger Global had close to 20 percent stake in Flipkart valued at $4 billion. Walmart has reportedly bought 75 percent of Tiger’s shares, with the investment firm still holding 5 percent stake in the company.
SoftBank, for its part, sold 60 percent of its shares for $4 billion. The Japanese conglomerate had pumped in $2.5 billion into Flipkart last year. After the sale, SoftBank will still hold close to 40 percent of its shares. Naspers and Accel Partners parted with 11.18 and 6.88 percent stakes, respectively. LiveMint has a great analysis of the deal with terrific background.
The Walmart-Flipkart deal, said to be the largest e-commerce deal in the world, has set the ball rolling for renewed investment into the Indian company, which is losing money with no short-term path to profits.