Economic Challenger Issue 80 July -Sept 2018 | Page 5

EDITOR’S DESK
THE IMPACT OF WALMART FLIPKART DEAL ON INDIA
T
he U.S. Retailer Walmart Inc picks up
77% stake in India's largest online
retailer Filpkart for $16 billion. This is
country's largest acquisition and the
world's biggest purchase of an e-commerce
company. Walmart will also infuse fresh
investment of $ 2 billion in order to take on
rival Amazon's global expansion. The deal
has valued Flipkart at $ 20 billion and after
fresh infusion funds it will be worth $22
billion.
This deal will result in the largest exit for
private equity and venture capital investors
in Indian start-ups. These will collectively
make about $14 billion by selling shares to
Walmart. The Tiger Global Management
New York will rake in $3.3 billion from its
total investment of $1 billion in Flipkart.
Japan's Soft Bank will get a return of about
$4 billion, fetching about 1.5 times of its
investment of $ 2.5 billion in Flipkart. Online
markets space e-Bay which invested about
$500 million will get $1.1 billion. Similarly,
Accel Partners, Naspers, etc. will also get
bumper returns by share sale in Flipkart.
Walmart will maintain Flipkart brand and
support etailer's IPO plans. Walmart plans
to use Flipkart's expertise to expand
globally and assure that it will continue to
nurture and strengthen Flipkart's start-up
culture. Walmart's chief executive officer
Doug Mc Millan hoped to learn how to build
an ecosystem about innovation and
payments and assured employees to help in
sourcing and supply chain expertise.
The Flipkart CEO Kalyan Krishanmurthy is
of the opinion that Walmart is joining as a
strategic investor and long-term partner in
Flipkart to make deep investments to
technology, innovation, supply-chain and
business processes. It will not kill small
businesses by selling products at ultra law
prices as is generally feared.
Walmart's expertise will help Flipkart
strengthen its market price in terms of back-
end systems, process automation, supply-
chain and sales. Flipkart will now leverage
its Omni-channel retail expertise, grocery
and general merchandise, supply-chain
knowledge and financial strength while
Walmart will have access to Flipkart's
technology, customers' insight and agile
and innovative culture.
There will be an intense fight for a greater
online market share between the two giants
Amazon and Walmart. The world's largest
retailer Walmart will bring in its immense
offline organized retail expertise helping
Economic Challenger// ISSN 0975-1351/ Issue 80, July - September 2018
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