India's Flipkart raises $3.6bn in new funding deal that values company at $37.6bn

Softbank reinvests in company on behalf of its Vision Fund 2 after selling its previous stake in 2018 to Walmart

The logo of e-commerce company Flipkart at its headquarters in Bengaluru. The company on Monday said it raised $3.6 billion through its latest funding round. AFP.

Walmart-backed Flipkart, one of India's biggest online retailers, on Monday raised $3.6 billion through its latest funding round that brought global technology investor SoftBank Group back into its group of investors.

The latest investment values the e-commerce platform at $37.6bn as it continues to grow operations across India, Asia’s third-largest economy, the company said in a statement on Monday.

In addition to Walmart, the funding round garnered “significant interest from global investors” including sovereign funds, private equity players and crossover investors.

It was led by Singaporean wealth fund GIC, Canada Pension Plan Investment Board and SoftBank Group, on behalf of its Vision Fund 2.

DisruptAD, the Qatar Investment Authority, Khazanah Nasional, Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global also participated in the financing deal.

“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,” said Kalyan Krishnamurthy, chief executive of the Flipkart Group.

“As we serve our consumers, we will focus on accelerating growth for millions of small and medium [size] Indian businesses, including kiranas [small groceries].”

The company is committed to transforming the online shopping experience in India and will continue to invest in new categories and technology to do so, he said.

Flipkart is expanding into small cities and towns in India and is investing in boosting its warehousing and logistics capabilities to compete against Amazon’s Indian unit.

It is also expanding its online marketplace with the inclusion of new product categories to broaden its customer base and grab a larger share of the market.

The e-commerce market is rapidly expanding in India and is expected to reach $188bn billion by 2025. Two deadly waves of Covid-19 in India and subsequent lockdowns have also hastened the growth of the sector in the country.

An increase in internet users to 974 million and about 220 million online shoppers in India by 2025 also bode well for the growth of the sector, according to Grant Thornton.

“Flipkart is a great business whose growth and potential mirrors that of India as a whole – that’s why we invested in 2018 and why we continue to invest today,” said Judith McKenna, president and chief executive of Walmart International.

SoftBank, which sold its Flipkart stake to Walmart in 2018, said its latest investment in the company is driven by the conviction that it will continue to serve consumers in India for “decades to come”.

“From our platform as one of the largest Asian e-commerce investors, SoftBank has a broad lens on the fundamental trends shaping digital commerce in the region,” said Lydia Jett, partner at SoftBank Investment Advisers.

“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.”

The Bengaluru-based company is exploring an option to go public with a valuation of up to $50bn. Several other Indian start-ups including Zomato, payments services company PayTM and ride-hailing platform Ola are also evaluating listing plans, according to media reports.

Twenty-two companies had listed their shares as of July 9. There were $3.6bn worth of initial public offerings in India in the first half of 2021, up from $1.1bn at the same time last year, according to Refinitiv data.

With more than 350 million registered users from across the country, Flipkart offers products in key categories such as fashion, travel and grocery. It owns e-fashion retailer Myntra and its logistics and supply chain arm, Ekart, employs more than 100,000 people across India.

The group is also a majority shareholder in PhonePe, a payment app with more than 300 million users, which enables more than 1 billion transactions every month.