Maximum key shareholders in Flipkart (India’s largest online retailer) have considered selling their stakes to Walmart, The company In Bengaluru. Although the people aware of the development said that the biggest of them, Soft-Bank, is holding out for a better price.
According to the updates recently, Walmart has finally agreed on buying the stakes of New York-based investment firm Tiger Global Management, South African media conglomerate Naspers, venture capital firm Accel and China’s Tencent Holdings.
Sachin Bansal and Binny Bansal the founders of Flipkart founders, may sell a part of their stake in the company. The 6 shareholders altogether hold more than 55% of the Flipkart’s shares. The biggest stakeholder SoftBank at 20%, is seeking a better price, estimating $15-17 billion, through a secondary sale of shares, said the people cited above.
From it’s Vision Funds of $100 Billion, It had invested $2.5 billion in Flipkart last year in August, at the time the largest private investment in India’s consumer internet sector. According to the people, SoftBank has remained relatively cold to overtures made by Walmart, which is believed to have offered a $10-12 billion valuation to purchase the shares held by the Tokyo-headquartered investor.
A Source said, “Discussions with SoftBank are still ongoing… Most of the others have come aboard. In a deal like this, there are always ebbs and flows, but there is a time factor to consider as well.” He also said that the final contours of the transaction are still being worked on and can be changed within a short notice.
It is not yet clear if the Japanese strategic investor will be continuing talks if Walmart goes on to clinch a deal with the rest of the shareholders, given that the exclusivity period has ended a few weeks back. The point to be pointed out was that the Walmart would be close to 50% ownership if it acquires the stakes of the investors it has reached agreement with.
Other than buying shares from existing investors, Walmart is also expected to put in fresh capital into Flipkart, which may push the size of the deal to $10-12 billion.
The first report about the deal between Flipkart and Walmart came out in January 2018.
Adding to this, sources also said that Amazon, for which India is a critical market, has also thrown its hat into the ring for Flipkart and is believed to be in talks with many of its shareholders, that also includes SoftBank.
SoftBank declined to comment.
One of the spokesperson said, “We never comment on speculation and/or ongoing negotiations.”
Also Flipkart, Tencent, Tiger Global, Naspers and Amazon didn’t respond to queries.
Additionally, digital news platform Recode said on Monday that eBay, which has a stake in Flipkart, had also not agreed to a deal with Walmart because of its commercial agreements with the Indian platform. This gives merchants who sell on Flipkart access to more than 150 million customers from eBay all over the world.
As per the terms of Walmart’s proposed investment in Flipkart, which is anticipated to change the face of India’s consumer internet, technology and retail industries, the primary investment will value the Bengaluru-based company at about $20-22 billion, close to a 100% rise from the $10.2-billion valuation it got in April 2017, before it raised funds in a round led by Chinese internet giant Tencent, which then valued it at $14.2 billion.
