Walmart pays $3.5 billion to increase its stake in India’s Flipkart

Walmart has spent $3.5 billion this year acquiring shares from some Flipkart stakeholders and settling debt with some PhonePe shareholders, illustrating how aggressively it is betting on India at a time when its main Global rival Amazon is cutting spending in the South Asian market. .

The $3.5 billion in spending took place in the first six months of 2023, Walmart first revealed in a filing Friday with the SEC. Walmart’s stake in Flipkart now stands at around 80%.

Some of the investors who sold their stakes in Flipkart this year include Tiger Global, Accel and Flipkart co-founder Binny Bansal, a previous Flipkart filing showed. Tiger Global earlier revealed that it made an overall gain of $3.5 billion from a $1.2 billion investment in Flipkart, its biggest win in the South Asian market.

Walmart, which also owns a majority of PhonePe and has spent more than $20 billion on the two businesses, is accelerating its investment in Indian e-commerce and payment platforms at a time when many other companies, including Amazon, have cut back their expenses. .

To put that figure into perspective, Amazon plans to invest less than $2.5 billion in its e-commerce platform in India over the next seven years.

Amazon, which has invested more than $11 billion in its e-commerce group and AWS in India over the past decade, plans to invest another $15 billion by 2030. Of that $15 billion, Amazon earmarked $12.7 billion for its cloud business.

During an earnings call last month, Walmart said PhonePe and Flipkart continued to show impressive growth.

“Flipkart delivered strong GMV and net sales growth as the core business continues to grow well,” said John David Rainey, Walmart’s chief financial officer.

“The team continues to work on expanding the ecosystem of products and services such as advertising, travel and healthcare, and continuously improving the benefits of contributions. Flipkart’s steady progress and performance strengthens our confidence in the long-term value of this company.

India has become a key battleground for global companies as they race to find their next billion customers.

“India is the new China and the fastest growing major economy over the next decade and beyond,” Baron Capital wrote in a recent fund letter.

“We believe India offers the most attractive long-term investment allure in our universe. Economic reforms, digitalization, formalization, and growing credit penetration favor the most sophisticated and well-managed state-owned enterprises.

PhonePe, which spun off from Flipkart, disclosed $850 million in new investments in recent quarters from a number of investors including General Atlantic, Tiger Global and Walmart.