US e-retail giant Walmart is planning to raise $2-3 billion for its subsidiary Flipkart at a valuation of more than $40 billion to expand business in India, quoting sources a news report said.
“Walmart may prefer to bring strategic investors into Walmart-Flipkart through this fundraising, unlike in the last round. However, Walmart-Flipkart is also open to selling to large pure-play investment firms," one of the sources told Mint.
Flipkart raised about $3.6 billion in July last year. It is estimated that $700-800 million of this capital remains, the sources told Mint.
According to a source, “Walmart is keen to bring in strategic investors in Walmart-Flipkart so that Flipkart can get additional expertise as well as consistent funding support as and when required to stay ahead in the country's e-commerce competition.”
A Flipkart spokesperson, however, said there are no such plans at the moment, and the news is inaccurate and speculative.
As part of Walmart's latest fundraising plan, investment bankers will seek out strategic partners and large global investors.
"The funds could be used not only for adding resources, such as fulfilment centres (storages and warehouses), new businesses and workforce but also for potential acquisitions in the Indian e-commerce space," the first source said, as quoted by Mint.
Flipkart's current value is over $40 billion, and it may dilute around 7 per cent if it raises as much as $3 billion, according to the sources. The e-commerce firm carried out its first capital infusion round in July last year, valued at $37 billion since Walmart acquired a 77 per cent stake for $16 billion in 2018.
The fundraising will help Flipkart build a war chest to compete with aggressive rivals Amazon India, Reliance Industries' Jio Mart, and Tata Group.
Among the investors in Flipkart's last funding round were the Canada Pension Plan Investment Board, GIC, SoftBank Vision Fund 2, and Walmart, the parent company of Flipkart. Qatar Investment Authority, Khazanah Nasional Bhd, DisruptAD, Tencent, Franklin Templeton, and Tiger Global also participated.
After Walmart acquired Flipkart, the company has expanded to newer locations in India and added new product categories. Flipkart now sells a full range of groceries and furniture on its platform. New warehouses have also been added by the e-commerce firm to facilitate faster delivery. In addition to offering Flipkart Pay Later services, it has also launched a research and development (R&D) centre in Israel since acquiring Israeli start-up Upstream Commerce.