Walmart on Tuesday infused $1.2 billion into its Indian subsidiary, Flipkart Group, which gives the e-commerce major a post-money valuation of $24.9 billion. The investment round was also backed by the company’s existing stakeholders.
The funds will be released in two tranches during the financial year, Flipkart said in a statement on Tuesday.
The firm further said the fresh funds will be deployed to continue supporting the growth of its online marketplace as “India emerges from the Covid-19 pandemic”.
“Since Walmart’s initial investment in Flipkart, we have greatly expanded our offer through technology, partnerships and new services. Today, we lead in electronics and fashion, and are rapidly accelerating share in other general merchandise categories and grocery, all while providing increasingly seamless payment and delivery options for our customers. We will continue innovating to bring the next 200 million Indian shoppers online,” Flipkart CEO Kalyan Krishnamurthy said.
US-based retailer Walmart acquired a controlling stake in Flipkart in a hefty $16-billion deal in 2018, valuing the Bengaluru-based firm at $21 billion.
The funding also comes at a time when the Indian e-commerce space is gearing up for competition with the entry of JioMart that has the backing of Mark-Zuckerberg-led Facebook. Earlier this year, the social media company partnered with Mukesh Ambani’s Reliance Jio in a $5.7-billion deal, it’s biggest stake buy since its 2014 acquisition of WhatsApp.
Amazon, which is already the market leader in the e-commerce space along with Flipkart in January, said it will invest an incremental $1 billion in the country taking its total commitments to $6 billion.
“Flipkart continues to leverage its culture of innovation to accelerate growth and enable millions of customers, sellers, merchants and small businesses to prosper and be a part of India’s digital transformation,” Judith McKenna, president and CEO of Walmart International, said.
E-commerce companies have seen a surge in user traffic amid the pandemic as most consumers restricted movements and shifted to online shopping. Demand for products like electronic items, smartphones, kitchen appliances and casual wear saw an uptick as corporates took to working from home and virtual classrooms boomed, companies had said earlier. To meet the rise in demand, players like Amazon have ramped up hiring. Firms in the online food delivery space like Swiggy and Zomato quickly moved to delivering groceries to cash in on the new normal.
Flipkart claimed to have recently surpassed 1.5 billion visits per month. The firm said it reported a 45% growth in monthly active customers and 30% growth in transactions per customer for FY20. The company offers 150 million products across more than 80 categories.