US-headquartered retail group Wal-Mart is in advanced talks to invest up to $1bn in India-based e-commerce company Flipkart, Bloomberg reported today, citing a person familiar with the matter.
Flipkart is one of the major players in India’s e-commerce industry and is currently fighting both local rival Snapdeal and US-based Amazon.com, which has spent heavily to build up its business in the country.
Amazon passed Flipkart as India’s most downloaded e-commerce app in July this year, and has pledged to invest another $3bn in its Indian business, which makes fundraising crucial for Flipkart.
The deal would also give Wal-Mart a stake in one of the world’s fastest growing online retail markets at a time when it is expanding its online business.
Wal-Mart acquired a 5% stake in China-based JD.com in June 2016 as part of a private equity deal and closed the $3.3bn acquisition of US-based Jet.com late last month. It formed an Indian brick-and-mortar joint venture with conglomerate Bharti Group in 2007 but dissolved the partnership in 2013.
Negotiations are ongoing, and a valuation and stake size is yet to be agreed. Flipkart raised $700m in July 2015 at a reported $15bn valuation but its investors have since marked the valuation down to between $9bn and $11.5bn.
LiveMint reported in April this year the company had entered talks with 15 investors in the preceding six months but had failed to find anyone willing to invest at the same valuation.
Flipkart has so far raised about $3.1bn in venture funding since it was founded in 2007, with Tiger Global Management and Steadview Capital among the investors in its July 2015 round.
The company’s other backers include e-commerce and media group Naspers, IDG Ventures India, a venture capital affiliate of media company IDG, Greenoaks Capital, Qatar Investment Authority, DST Global, GIC, Morgan Stanley, Sofina, Accel Partners, Vulcan Capital and Iconiq Capital.
News of the prospective investment comes a day after the Economic Times reported that Amazon and Flipkart had begun talks over an acquisition in 2015, likely using a Flipkart investor as an intermediary, but could not reach an agreement and ended negotiations before the end of the year.