Flipkart raises $3.6 billion in fresh funding as valuation jumps to $37.6 billion
Ecommerce major Flipkart has raised $3.6 billion in a new round of funding that will give it massive firepower to expand online shopping in India and take on well-capitalised rivals like Amazon, Reliance Industries (RIL) and the Tata Group.
Flipkart group’s latest funding, among the largest by an Indian private company, was led by Canada Pension Plan Investment Board (CPP Investments), Singapore government’s sovereign wealth fund GIC, SoftBank Vision Fund 2 and its largest shareholder, Walmart, along with participation from existing backers like Qatar Investment Authority.
Post the financing, the company will be valued at over $37.6 billion up from $24.9 billion it commanded a year ago in an internal round led by Walmart.
Sovereign funds like DisruptAD, Khazanah Nasional Berhad, and marquee investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global have also participated in the new fundraise, a statement from the web retailer said on Monday. Walmart is expected to hold around 74-75% stake in Flipkart, post this round of funding. Flipkart is also buying back employee shares worth over $80 million giving liquidity to those who hold company ESOPs, sources added.
The fresh capital will be used to expand operations and gain market share at a time the Indian online retail market is seeing rapid adoption aided by the Covid-19 pandemic. Flipkart will look to deploy investments in grocery, fashion and consumables along with deploying funds to enhance its supply chain and logistics network. The investment in grocery and Flipkart's technology stack will be disproportionate compared to other segments. Flipkart's increased focus on grocery comes when demand for essentials online steadily growing, thanks to the pandemic.
"This investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximise this potential for all stakeholders. As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas. We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain,” said Kalyan Krishnamurthy, CEO, Flipkart Group, in a prepared statement.
The Bengaluru-based etailer also houses fashion portal Myntra which has been hit by the pandemic as demand for fashion and accessories had plummeted. PhonePe, the payments unit of Flipkart, was spun out as a separate entity late last year valuing it at $5.5 billion. Flipkart and Walmart continue to be its largest shareholders but the payments platform, which competes against SoftBank and Alibaba-backed Paytm, Amazon Pay, and Google’s local payments unit Google Pay, is looking to raise additional capital from external investors. It had constituted its own board at the time of restructuring in December 2020.
"SoftBank’s re-investment in Flipkart is driven by our experience with and conviction in the company’s management team to continue addressing the needs of the Indian consumer in the decades to come. From our platform as one of the largest Asian ecommerce investors, SoftBank has a broad lens on the fundamental trends shaping digital commerce in the region. The opportunity to meet consumer demand for high-quality selection at low prices and a young population make online consumption critical to India’s quest for the ‘$5 trillion economy’ that Flipkart’s growth story has been enabling,” Lydia Jett, Partner, SoftBank Investment Advisers, said.
