PHOTO
MUMBAI - Walmart is filling its basket in India. The $320 billion U.S. retailer is eyeing the purchase of up to 20 percent of Flipkart, Amazon.com's arch-enemy on the Indian subcontinent, according to the Economic Times. That could cost the New York-listed giant up to $3 billion based on the e-commerce firm's most recent valuation. It would give Walmart a new weapon in its long battle to gain access to the country's consumers. Flipkart, meanwhile, would secure a marquee U.S. backer ahead of a potential New York initial public offering. Walmart, led by Doug McMillon, has been lurking in the Indian retail aisle for over a decade. It still has just 21 "Best Price" branded cash-and-carry stores, partly the result of a joint venture with Bharti Enterprises which Walmart took over following allegations of corrupt practices. India's foreign-investment rules make it hard for a multi-brand retailer to set up consumer-facing stores so the grocer is instead biding its time selling food and other goods to mom-and-pop shop owners that make up the vast majority of the nearly $700 billion retail market.
An investment in Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal (no relation), would give Walmart another way to reach India's 1.3 billion people. Online retail, including food delivery, accounts for barely 2 percent of the total market but will rise to around 12 percent in about a decade, Morgan Stanley analysts reckon.
For the Bengaluru-headquartered e-commerce outfit, bringing Walmart on board could have multiple benefits. For one thing it would be a stamp of approval from a hugely successful traditional retailer. And Flipkart could learn how the U.S. giant is taking on Jeff Bezos’ Amazon in its home market. After substantial investments in e-commerce, Walmart's online sales grew by 50 percent from a year earlier in its most recently reported quarter.
The privately held Flipkart, valued at some $12 billion, already counts SoftBank's Vision Fund and U.S. fund Tiger Global amongst its largest investors. Smaller stakes are in the hands of U.S. marketplace eBay as well as China's Tencent and Alibaba – which is part-owned by SoftBank and also dabbling in Indian e-commerce through an investment in Paytm Mall. Support from Walmart would add to the formidable line-up ahead of a possible New York listing. It looks like a checkout deal that everyone involved could approve of.
CONTEXT NEWS
- U.S. retailer Walmart is in advanced talks to buy a stake of up to 20 percent in Indian e-commerce firm Flipkart, Indian financial daily the Economic Times reported on Jan. 30.
- A deal could be finalised as early as March, the paper added, noting that Walmart Chief Executive Doug McMillon led a company delegation to Flipkart's Bengaluru office early last week.
- "We don’t comment on rumours and speculation," company spokesman Randy Hargrove told Reuters via email.
- Walmart operates 21 Best Price Modern Wholesale stores in India, through a cash-and-carry format.
(Editing by Richard Beales and Bob Cervi)
© Reuters News 2018
An investment in Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal (no relation), would give Walmart another way to reach India's 1.3 billion people. Online retail, including food delivery, accounts for barely 2 percent of the total market but will rise to around 12 percent in about a decade, Morgan Stanley analysts reckon.
For the Bengaluru-headquartered e-commerce outfit, bringing Walmart on board could have multiple benefits. For one thing it would be a stamp of approval from a hugely successful traditional retailer. And Flipkart could learn how the U.S. giant is taking on Jeff Bezos’ Amazon in its home market. After substantial investments in e-commerce, Walmart's online sales grew by 50 percent from a year earlier in its most recently reported quarter.
The privately held Flipkart, valued at some $12 billion, already counts SoftBank's Vision Fund and U.S. fund Tiger Global amongst its largest investors. Smaller stakes are in the hands of U.S. marketplace eBay as well as China's Tencent and Alibaba – which is part-owned by SoftBank and also dabbling in Indian e-commerce through an investment in Paytm Mall. Support from Walmart would add to the formidable line-up ahead of a possible New York listing. It looks like a checkout deal that everyone involved could approve of.
CONTEXT NEWS
- U.S. retailer Walmart is in advanced talks to buy a stake of up to 20 percent in Indian e-commerce firm Flipkart, Indian financial daily the Economic Times reported on Jan. 30.
- A deal could be finalised as early as March, the paper added, noting that Walmart Chief Executive Doug McMillon led a company delegation to Flipkart's Bengaluru office early last week.
- "We don’t comment on rumours and speculation," company spokesman Randy Hargrove told Reuters via email.
- Walmart operates 21 Best Price Modern Wholesale stores in India, through a cash-and-carry format.
(Editing by Richard Beales and Bob Cervi)
© Reuters News 2018
