American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores- Walmart is actively looking to invest in Indian e-commerce giant Flipkart and is willing to pay billions for as much as 20 percent stake.
Walmart is the world’s biggest retailer and if it invested in the Indian unicorn, it is expected that it may increase Flipkart’s valuation to as much as $20 billion, which as per the researcher CB Insights is currently $12 billion. It is also mentioned by the source Bloomberg that the talks are in advanced stage, but the terms could still change and the deal may not be finalized.
“Walmart will make Flipkart a stronger rival to Amazon,” said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors Pvt. “Strategically, combining forces makes sense for both.”
The battle in the e-commerce sector between Amazon,Flipkart and Paytm is hot and Walmart’s backing would certainly give boost to Flipkart’s capital and help it gain some advantage over Amazon.
India is considered as a very potential spot for e-commerce sector after USA and China. This is the very reason why it is attracting such investment interests from all around the globe. India’s online market is projected to reach $28 billion by 2020, according to estimates from Kotak Institutional Equities.
If Walmart wants to own a part of Indian market, Flipkart is one of the best and easiest way to do that. Snapdeal, which was once a thriving e-commerce platform is not doing so great, having lost support from SoftBank, which owned almost a third of the company.
“Walmart doesn’t have much of a choice in India,” said Singhal. “They either have to go it alone or partner with someone else as Indian e-commerce has the potential to become really big.”
With inputs from Bloomberg